What is an appraisal?
As you know, a home purchase is the largest single investment most people will ever make. Whether it's a primary residence, a second vacation home in the beautiful Texas Hill Country or an investment such as rental property in San Antonio, your purchase of real property is a complex financial transaction that requires multiple parties to pull it all off.
Most of the people involved are very familiar: the realtor, the mortgage company and the title company.
So who makes sure the value of the property is in line with the amount being paid? This is where Tejas Appraisal Company comes in. Our appraisals are an unbiased estimate of what a buyer might expect to pay - or a seller receives - for a parcel of real estate, where both buyer and seller are "informed parties." To be an informed party, most people turn to an appraiser to provide them with the most accurate estimate of the true value of their property.
It all starts with the inspection. Our duty is to inspect the property being appraised to ascertain the true status of that property. We must actually see features, such as the number of bedrooms, bathrooms, the location, and so on, to ensure that they really exist and are in the condition a reasonable buyer would expect them to be. The inspection often includes a sketch of the property, ensuring the proper square footage and conveying the layout of the property. Most importantly, our appraisers look for any obvious features - or defects - that would affect the value of the house.
Once the site has been inspected, our Certified Appraiser Dave Drapela uses two or three approaches to determining the value of real property: a cost approach, a sales comparison and, in the case of a rental property, an income approach.
In this approach, we use information on local building costs, labor rates and other factors to determine how much it would cost to construct a property similar to the one being appraised. This value often sets the upper limit on what a property would sell for. Why would you pay more for an existing property if you could spend less and build a brand new home instead? While there may be mitigating factors, such as location and amenities, these are usually not reflected in the cost approach.
In this approach, Tejas Appraisal Company relies on sales comparison to value these types of items. We have thorough knowledge of the Texas Hill Country and San Antonio neighborhoods in which we work and over ten years of experience. We understand the value of certain features to the residents of our area. We know the traffic patterns, the school zones, the busy throughways. And we use this information to determine which attributes of a property will make a difference in the value. Then, we research recent sales in the vicinity and finds properties which are 'comparable' to the subject being appraised. The sales prices of these properties are used as a basis to begin the sales comparison approach.
Using knowledge of the value of certain items such as square footage, extra bathrooms, hardwood floors, fireplaces or view lots (just to name a few), we adjust the comparable properties to more accurately portray the subject property.
In the case of income producing properties, like rental houses, we may use a third approach to valuing the property. In this case, the amount of income the property produces is used to arrive at the current value of those revenues over the foreseeable future.
Combining information from all approaches, Tejas Appraisal Company is then ready to stipulate an estimated market value for the subject property. It is important to note that while this amount is probably the best indication of what a property is worth, it may not be the final sales price. There are always mitigating factors such as seller motivation, urgency or ''bidding wars'' that may adjust the final price up or down. But the appraised value is often used as a guideline for lenders who don't want to loan a buyer more money than the property is actually worth. The bottom line is this: Tejas Appraisal Company will help you get the most accurate property value, so you can make the most informed real estate decisions.