Ordinarily the appraisal is ordered by the buyer's lender and at the buyer's expense. With the Seller Assist Program, the seller needs to know up front the amount of owner-financing that can be offered. And that depends on an appraisal carried out by a company in whom the ultimate note purchaser is confident.
Aside from knowing this, when dealing with prospective buyers, there are solid additional benefits to the seller of having the appraisal in hand:
Yet another benefit to the seller of ordering the appraisal is that the appraisal belongs to the seller. The seller has an opportunity to challenge it, if there is reason to think it has come in too low. The seller does not get this opportunity where the buyer's lender has ordered the appraisal.
An appraisal of real estate is the valuation of the rights of ownership. The appraiser must define the rights he intends to appraise.
The appraiser does not create value, the appraiser interprets the market to arrive at an estimate of value. As the appraiser compiles data pertinent to his report, he considers the site and amenities as well as the physical condition of the property. The appraiser may spend only a short time inspecting the property but this is only the beginning.
Considerable research and collection of general and specific data must be accomplished before the appraiser can arrive at a final opinion of value.
An appraisal for our purpose is an opinion of value. This opinion or estimate is derived by using three common approaches to value, all derived from the market. They are:
1. Cost Approach: This is what it would cost to replace or reproduce the improvements as of the date of the appraisal, less the Physical Deterioration, the Functional Obsolescence and the Economic Obsolescence. The remainder is added to the Land Value.
2. Comparison Approach: This makes use of other "bench mark" properties of similar size, quality and location that have been recently sold. A comparison is made to the subject property.
3. Income Approach: This is of primary importance in ascertaining the value of income producing properties and has little relevance to single family homes. This approach provides an objective estimate of what a prudent investor would pay based upon the net income the property produces.
After thorough analysis of all general and specific data gathered from the market and correlated, the appraiser makes a final estimate or opinion of value.
The appraisal must be ordered from the Beacon program approved appraiser, General American Corporation (GAC). 1-800-570-0444. Use account number 90-2500. Order taking and general questions Account Rep is Robert Sargent, rsargent@gac.com. If Robert Sargent is not available, ask for Rena Lowry, rlowry@gac.com. Our senior Account Rep is Robbie Ewens, rewens@gac.com. Contact Robbie if you have comparable disputes or service issues.
When ordering, request an appraisal listing the "seller" as the lender and request that it be done COD. Request a "Full Appraisal." The appraisal cost is usually about $300.
An appraisal is an opinion of value. It is not necessarily cast in stone. At the same time as you order the appraisal, ask a couple of realtors for a Comparative Market Analysis (CMA) of your home. Be up front with them. Tell them that you intend to sell by owner. They will be glad to provide a CMA. It only takes them a few minutes work on the computer. It spreads good will and realtors always live in the hope and expectation that a FSBO will eventually list with them.
If you like the look of the CMAs, give them to the appraiser when s/he calls. If you have reservations about the numbers, hold them back for review when the appraisal is delivered to you. If you feel that the appraisal has come in too low and the CMAs back your opinion up, you have a documented basis for requesting a review from GAC.
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