Have you received an appraisal and found yourself confused by all the language used? My goal with this blog is to make your life a bit easier by explaining some of the language in appraisals that can often make it hard to understand.
Comps- Comps also known as comparables is used often. A comparable is a property that is similar to the property being sold. Some of the similarities that make a good comparable are gross living area, bedroom, bathroom count, age, design, condition, location, amenities, and price.
Amenities– There are many amenities also known as features a property may have. These would include things such as views, pools, sport courts, or a spa.
GLA– GLA or gross living area is the above grade heated and cooling area. This means basements, attics, and any other space that is not accessible from the main entrance do not count.
Adjustments– An adjustment is used to recognize the differences between the subject property and the comparables amenities. For example, if the subject property has a pool and one of the comparables does not the appraiser would use a positive adjustment. And if the comparable had an extra bedroom and bathroom, negative adjustments would be used to make it more like the subject.
Functional Obsolescence-This is a permanent feature of the home that would potentially cause the property to sell for less. It is a feature that has a negative impact on the property. An example of this would be a bedroom that is only accessible by walking through another bedroom. This would be very inconvenient and cause the person in the walk-through bedroom quite a bit of annoyance.
External Obsolescence– This is when something outside of the property lines is negatively impacting the property. An example would be airplane noise or railroad noise. This would cause the value of the property to decrease.
Effective Age– The effective age of a property is how it appears rather than when it was built. If a property was built 40 years ago but it has had upgrades and renovations its effective age may appear to be closer to 15 years old.
Depreciation– This generally refers to the loss in property value from a cause. Some things that could cause depreciation are items that need repaired or replaced such as floors, drywall, roofs, etc.
Sale Comparison Approach– This is one of the three approaches used to value a property. It compares properties recently sold also known as comparables to the subject to determine a value.
Cost Approach– This is the second of three approaches that value a property. This approach considers the current construction cost, depreciation, and current value of the land the subject is built on.
Income Approach– The third approach that is used to determine the potential earnings of the subject property. This approach uses current rents of similar properties to develop an opinion of value.
Arm’s Length Transaction– This refers to a transaction that both parties both the buyer and seller are not under any undue pressure and are acting under their own self-interest. Some types of transactions which would not be considered arm’s length are foreclosure or divorce.
Sale Price to List Price Ratio– This compares the final sale price to the original asking price of a property. The higher the ratio the closer the sale price was to the list price or asking price.
Please contact our office with any questions you may have or to schedule your appraisal appointment at 760-741-7699, email@example.com or use our contact page on our website.
Brandlin Appraisals Inc. specialize in helping people who need appraisals for estate purposes, divorce, date of death, bankruptcy, FSBO’s and more throughout San Diego county. For more information please contact us at (760)741-7699, or visit our website at Brandlinappraisals.com, or email us at firstname.lastname@example.org
San Diego, CA // Real Estate Appraiser
San Diego Real Estate Appraisal Services For:
* Divorce Appraisals / Marriage Dissolution
* Bankruptcy Appraisals
* Bail Bonds Appraisals
* Estate / Date of Death / Retrospective Appraisals
* Financial Planning & Trusts
* PMI Removal Appraisals
* Pre-Foreclosure & Short Sales
* Tax Assessment Appeals
* Pre-Listing, Pre-Purchase, FSBO’s
* Probate Appraisals