Real estate appraisal for rental properties isn't the same as for single family homes. If you were looking at a 24-unit building, it would be difficult to find similar ones nearby that have recently sold. Therefore, a market analysis using comparable sales isn't normally used.

It is also not ideal to use replacement costs either. How do you figure replacement cost if there is no land for sale nearby with proper zoning? This is used as a secondary method, though, and can tell you if maybe you should be building instead of buying.

Real Estate Appraisal Using Capitalization

Investors buy rental properties for the income. Therefore it is the income that is used to determine value. The rate of return expected by investors in a given area gives you the capitalization rate, and this is what you use to accurately appraise an income property.

Start with the gross ...

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Why are you getting an appraisal? Is it needed to close a loan? Is it to find out if you have enough security for the loan in case the borrower can't pay? The appraiser must make sure that, if the property were to be foreclosed on the lender will be able to get there money back. The appraiser is not determining whether the purchase price was fair or not. The appraiser is working for the lender.

Here are a few ideas that will help make for a smoother working relationship with the appraiser. Get the appraiser this information before he starts.

- Get a copy of the loan documents - A copy of the sales contract - He/she will need a copy of the deed and legal description - Closet intersection and address of property - A description of property improvements - The existing owners name, address and phone numbers - Rent roll (if its ...

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For single family homes, there are two basic methods used in real estate appraisal. They are replacement cost analysis, and using comparable sales. A third appraisal method, based on capitalization, is used for income properties, and is covered in another article.

In figuring replacement cost the question is: What would it cost to buy this land and put this house on it? If the land (improved) would cost $40,000, and the house could be built for $150,000, the value indicated would be around $190,000 - if the house is fairly new. If it has used up 10% of its useful life, you can deduct $15,000 for depreciation.

Replacement cost is not really a very useful measurement. It is difficult to say what the land is worth in a city center where none is left for sale, for example, and tough to gauge depreciation. It is used as ...

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When it comes to finding a real estate appraiser, many homeowners don't know what to look for. This article describes 5 things to look for in a property appraiser.

1. Always make sure a property appraiser is licensed or certified by the state to perform real estate appraisals. While state licensing and/or certification isn't always an indication of quality, it ensures that an individual is has met certain standards and been authorized to perform property appraisals. Some states do not require licensing to perform real estate appraisals. It is unwise to use the services of any professional who is not licensed or certified.

2. Don't be afraid to ask an appraiser for a copy of their license. A good appraiser will readily provide this documentation. Copies of licenses are commonly requested by mortgage brokers and loan officers. Once you get a copy of their license, it ...

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Market/Sales price

Whether you are planning to buy or sell a property it is important to become familiar with the terminology of real estate. In real estate the three terms that are commonly used interchangeably are value, cost, and price. Although, all are concepts relating to value, they are not the same. Let's begin by differentiating between the terms.

Value deals with something that will happen in the future; whereas cost relates to past events, and the amount of money actually paid for the property is the price. Depending on circumstances, the value of a property may be the same, more than, or even less than the price. Several things determine the value of a property: the degree at which it satisfies a need, ratio of supply to demand, transferability, and whether a perspective buyer with need for the property can financially afford the property.

Value is a ...

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Professional appraisers sum it up in three words -- buyers make value. Ultimately, the value of your home is what a reasonable buyer is willing to pay within a reasonable time. Setting an asking price for your home requires that you anticipate what most buyers would be willing to pay. This requires a close look at comparable home sales in your area, as well as making an assessment of the state of the real estate market itself. Pricing correctly is fundamental to the successful outcome in the sale of your home.

Market Analysis

Homes listed for sale and recent closed sales in your area will usually provide relevant comparable data for pricing your home. Closed sales show "market confirmed" prices, while listing prices indicate the current trend in pricing. Later, when your home is appraised for the buyer's loan, the appraiser will only consider recent closed sales. Asking prices will ...

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