Every year a countless number of investors are buying real estate properties or selling real estate properties. Almost every property buyer or property seller includes in his/her transaction costs the price of real estate appraisal. We are sure that if, in some way, you are related to real estate investing, you must have heard the term “professional home appraisal“. This is one of the most crucial expressions that a real estate investor should be familiar with. By following this blog, we will answer your question “What is real estate appraisal?” in addition to confirming if a home appraisal calculator can actually replace the professional home appraisal. Keep on reading in order to find out the answers!
#1 What Is Real Estate Appraisal?
One of the main questions is real estate is: “What is home appraisal?” Basically, it is a process in which you, as an investor, receive a monetary evaluation of your investment property. You should know that conducting real estate appraisal is absolutely different from a home inspection. Home inspection will provide a property buyer and/or property seller with information about the condition of a particular real estate investment. However, the home inspector will not be able to provide you with a fair market value of the real estate property. So, in order to know how much your property is actually worth on the local housing market, you should hire a real estate appraiser in order for him/her to provide you with the fair market value.
Related: What You Need to Know About Home Appraisal
#2 Selecting Your Home Appraiser
Thinking about hiring a real estate appraiser is the right thing to do once you have decided you do not want to lose money when you are buying real estate properties and/or selling real estate properties. You may choose a real estate appraiser who works for a real estate agency. Another possibility is a home appraiser who works independently. Another option, of course, is using a home appraisal calculator.
Well, the advantage of using a home appraiser who works for an agency is that he/she has the access to various tools and data that independent appraisers simply do not possess. Because of these resources, such a home appraiser can provide you with better and more realistic value estimation of your property. However, an independent home appraiser may provide you with a different opinion. Also, he/she can complete the real estate appraisal for a lower fee. Lastly, you may use the home appraisal calculator, and all you need to do is to go online and fill in the details.
#3 What Steps Should You Take to Conduct Home Appraisal Yourself?
The right assessment methods for a real estate appraisal are crucial for your real estate business if you want to be a successful investor. Well, are you are curious about how much your property is worth? You also want to save some cash on hiring a real estate appraiser? An option is to conduct the analysis yourself. However, if you want to have precise numbers and suggestions, hiring a home appraiser is a must. The following three types of analysis are crucial for the fair market value estimation.
- Conducting Investment Property Analysis
Investment property analysis provides you with an insightful analysis of the property and its surroundings. It takes into consideration various real estate metrics. As it is hard to compute that many numbers by hand, Mashvisor’s investment property calculator is a real helper on this matter. This tool eliminates the need of collecting data yourself, which is really time and effort consuming. Moreover, it provides you with a financial analysis, which is very important if you want to make money in real estate. Additionally, it shows more accurate and quicker results when compared with the old spreadsheets. Last but not least, you can access the information anytime, it does not matter where you are. The tool calculates various real estate metrics. Such are the cash flow, cap rate, cash on cash return, return on investment, potential rental income, etc.
- Conducting Comparative Market Analysis
A comparative market analysis helps to determine the value of an investment property by comparing it to other similar, recently sold real estate properties. Such properties should be in radius of no more than 3 miles from the property of interest. These properties are called real estate comps, or real estate comparables. This is due to the fact that they have similar features as the property whose market value you are trying to determine. Conducting comparative market analysis is an important step. It is so when both buying and selling real estate properties on the real estate market.
- Conducting Real Estate Market Analysis
The main idea behind conducting real estate market analysis is getting in-depth information about the real estate property, about the supply and demand of properties in the area, about the neighborhood, and so on and so forth. Additionally, you, as a real estate investor, can check how your potential property is performing on the current market. Moreover, performing real estate market analysis and understanding the current condition of the market – buyer’s market or seller’s market – is very useful when you are planning on buying real estate properties as well as selling real estate properties.
Related: 9 Ways of Achieving a Higher Value During Home Appraisal
#4 Can a Home Appraisal Calculator Replace a Professional Home Appraisal?
Well, using a home appraisal calculator might be a good idea if you want to have a general overview. However, a home appraisal calculator will not give you such accurate information as a professional home appraisal. If you check for a home appraisal calculator online, you may notice that every website would advise to use additionally their home appraiser’s services along with the home appraisal calculator. A professional in the field can provide you with much more insightful information. Additionally, he/she can take into consideration various factors which this tool simply cannot. So, answering the main question: The home appraisal calculator cannot replace a professional home appraisal. This is due to the fact that property evaluation is trickier than it looks, and filling in information in the home appraisal calculator might not be enough to present you the full picture of a real estate property. However, using the tool might present you with a general guideline. It might be used to get a general idea about your real estate property on the market.
Related: When and Why Do You Need a Home Appraisal?
Are you curious to know more about home appraisal? Then visit Mashvisor right away as there is plenty of information to share!