For those that are thinking of entering the field of real estate investing it is imperative that you begin to get a grasp on the ability to appraise the value of a home. When you are investing in real estate it is important to remember that there are no NADA values placed in books like there are for car dealers and other large purchase items, this is all on you! In order for you to get started, this is truly just the tip of the proverbial iceberg; here are a few things to think about when you are appraising a home in the beginning of your real estate investing future.
Consider the home’s value based on the method you are going to use with most of your properties that you invest in. For instance, if you are going the route of appraising based on the value of other similar homes in the area then you should know the area inside and out to get the best numbers. If you are appraising based on the income the house could potentially bring you then you better consider everything involved. If you are appraising based on how much this house would cost with improvements to turn it into a profit then you better have a partner who knows this information or you better be prepared yourself!
Next, you should consider the type of value that you are going to use to get an appraisal on each home that you are considering. While investing in real estate you should know the difference between tax assessed value and appraised value. The tax assessed value is determined by a number of different rules, or laws, in your area based on the value of the land and the amount of improvements made to that same land. Meanwhile, the appraised value of the home will be more along the lines of the number you get for your car when you go to a local dealer. It is based on the comparison sales method, meaning it is based on the value of other similar homes in the area.
