Real estate appraisal is an essential element in real estate. Whether it is buying, selling, or renting a house. The first step that real estate agents, as well as their clients, look towards is real estate appraisal. Real estate appraisal is, therefore, the process through which parties involved like real estate agents in real estate determine the value of properties. Traditionally, there are three main methods of real estate appraisal.
Convectional methods of real estate appraisal
Comparing sales- this is the most common method of real estate appraisal. It is also the most straightforward. This method works in such a way that real estate appraisers use the sales of the previous property in the area to determine the value of a property. The appraisers have to ensure that the homes they are comparing have similar features. For instance, an appraiser can use the cost of a formerly sold three-bedroom house to determine the value of a three-bedroomed house as well.
Cost replacement- this method employs the amount of money that it would cost to duplicate the property in question. The appraisers consider aspects such as the current cost of a plot of land, materials as well as labour costs.
Income capitalization- this method is standard when determining the cost of a property that produces income (like a rental home). In such a case, the appraiser will have to determine the value of the property. It mostly depends on the amount of income that it produces.
While the methods mentioned above have proved useful over the years, there is so much work involved in each technique. In attempts to curb this issue, online valuation tools were established.
Online valuation tools
Online real-estate valuation tools take the work out of real estate appraisal. These tools are used to determine the value of properties.
How do online real estate valuation tools work?
When using an online real estate evaluation tool, the first step is to determine the type of tool to use. There are several evaluation tools on the internet from which to choose. Each of these tools differs from the rest in one way or another. The main similarity between then is that most of them are free. However, the tools vary depending on the region within which they serve as well as the level of accuracy. For instance, there are specific tools designed to cater to the United States’ real estate industry and others for the United Kingdom. Some tools are also designed for particular regions in a country as opposed to the entire country. It is important to note that these devices can not be used interchanging.
Once you have decided on which tool works best for you, the next step would be to provide specific information on the site. Such information includes the zip code and the address of the property. The online evaluation tools use this information to come up with an estimated value of the property. Most of these tools feature algorithms that compare the info to recorded sales in the particular location, the current state of the market, the state of the neighbourhood, and the available amenities in the area. By considering all these factors, the tools can come up with an accurate estimation of the value of the property.
You may also need to provide your email information. Through the email you provide, the valuation tools will send detailed information on the value of the property in question.
Factors that influence the value of a property
Size- it is common sense that larger houses with more rooms (bedrooms, bathrooms, and general size) cost more than the smaller ones.
Room for renovation- properties that are flexible enough to allow new owners to make changes to them tend to cost more than the latter.
Neighbourhood- properties in luxurious areas like gated neighbourhoods tend to cost more. The security and cleanliness of the community also affect the cost of the property.
Amenities and infrastructure- presence social amenities like schools, hospitals, and shopping centres also affect the property value. Availability of different modes f transport like rail and road may also increase the property value.
The market- this refers to the local housing market in the region where the property in question is located. The state of the market influences the prices of the properties.