- According to the principle of substitution, a buyer will not pay more for a home than what they would pay for another home that is equally attractive and available.
- CMAs take place in the neighborhood, at the home site, and with existing property improvements.
- The most common reason a house fails to sell is due to overpricing.
- The principle of supply and demand says that the value of a property depends on how many properties are available in the area, property prices, number of prospective buyers, and the price buyers are willing to pay.
- Appraisal Process
- Define the problem
- Collect, record, and substantiate all relevant information
- Ascertain the property's "highest and best use"
- Estimate the value of the land itself
- Estimate the value of the entire property (using one of the three approaches)
- Reconcile the values
- Report the final value estimate
- Why are appraisals performed?
- Aiding present owners in determining property worth for home equity loans or investment purposes,
- Assisting lenders in mortgage approvals and determining appropriate loan values,
- Correctly determining the ad valorem tax amount for a particular county,
- Discerning the current economic situation,
- Discovering past trends in a specific sector,