How Does The Appraiser Determine the Value of the Home?
The appraiser determines the value of the home based on three different approaches—the Sales Comparison Approach, The Cost Approach, and the Income Approach. When an appraiser is appraising residential homes, he will generally give the Sales Comparison Approach and the Cost Approach the most weight. With the Sales Comparison Approach, the appraiser will research and find at least three similar homes to the subject property. The comparable homes or ‘comps’ should be the most similar to the subject home with regard to style, square footage, number of bedrooms and bathrooms, age and other characteristics. These ‘comps’ should be located in close proximity to the subject property and have sold in the last six months. The appraiser looks at the comps and makes adjustments, since no two houses are exactly alike, in order to arrive at a final value estimate. The Cost Approach analyzes what it would cost to rebuild a similar structure.
What is the Title Company or Attorney Looking For When Examining the Title?
The Attorney is looking for any encumbrances that would affect the seller’s ability to offer clear and marketable title. The buyer’s attorney wants to certify that there is nothing on the title that would call into question the buyer’s legal right of ownership to the property after ownership is transferred.