As a real estate appraiser, I’ve been asked many times what my approach is to determine fair market value. While there are three main approaches to value (income, cost, and sales comparison), for residential appraisals the sales comparison approach is almost always used. The other two approaches are more often used for income producing properties and unique structures.
The sales comparison approach uses other sales to compare to the subject property. Ideally, the sales used are similar homes that have recently sold and are in close proximity to the subject. Before I research for comparable sales, I first inspect the property. It’s important to have a good understanding of the subject property in terms of style, location, size, quality and condition. Once I know this data, I will go on the Multiple Listing Service (MLS) to search for the comparables or “comps.”
When researching for comps, I will start by selecting some parameters to narrow down the results. Depending on the area, I may start by selecting the style and bedroom count and search back for the past 6 months. Then I may narrow it further by selecting the immediate neighborhood of the subject to find the best comps available. More often than not, I will have to expand these parameters to collect more data and find similar comparables as that search criteria is pretty narrow and limits the results.
If the goal is to determine the current fair market value, I will also research comparable active listings as well as similar homes under contract. If the goal is a retrospective fair market value, as in one that is dated back in time, then I will only use closed sales. Examples of this would be for estate planning and a valuation as of the date of death, or a tax appeal with a valuation as of October 1st of the previous year.
Once I select the best comparables, I will fill in the “grid” in the sales comparison approach. As you can see in the image below taken from an appraisal report, there are different line items are that important to consider. The top half of the grid is more important than the bottom half. The top half has line items for date of sale, location, lot size, style, quality, age, condition, and square footage. The bottom half has items like basement, heating and cooling, garage, exterior amenities, and fireplace. There are extra spaces below to add items like pool, tennis court, elevator, accessory unit, and other less typical features.
Adjustments are made for each line item that differs from the subject enough that it warrants an adjustment. In this example, the lot sizes are different, but they are close enough that someone in the market would not consider these differences to be significant. The condition of comparable 3 is significantly different and therefore a 10% condition adjustment has been applied. Once all of the adjustments have been made in the sales comparison approach, the appraiser will reconcile the final value.
When reconciling the final value, the appraiser takes into consideration all of the factors presented in the grid. They may also look at the bottom of the grid where there are two numbers on top of each other by the adjusted price. These numbers are the net and gross percentages. The lower these numbers are, the more similar the property is to the subject and the more weight that should be given to these comparables when factoring in the final value estimate.
If you are looking to determine the fair market value of your home, the sales comparison approach by a certified licensed appraiser is your best bet for the most accurate opinion of value. Please don’t hesitate to give us a call for any of your appraisal needs at 908-233-1337.
Evan from American Realty Appraisals came out to our home last spring to conduct a home appraisal in support of our property tax appeal. He arrived promptly at the agreed time, was very professional and conducted a thorough walk through. We were very satisfied with the results of his appraisal - they were well-researched and accurately captured the features of the home. His appraisal proved to be a crucial element in a very successful tax appeal. I would gladly recommend his services to others.
I was extremely pleased in my experience with American Realty Appraisals. Evan was very knowledgeable and was happy to answer any questions I had. His appraisal was useful in our being able to successfully appeal our taxes. It was worth every penny. He also shared some suggestions on how to shore up insulation efficiency around the house. 5 Star service. thanks!
Evan was extremely helpful in our obtaining a favorable result from our tax appeal and I highly recommend his services
If you want the Do's and Dont's. I would say DO use Evan. It was a very smooth and easy process. He worked around my schedule. His turnaround time was very impressive. Price: He was in line with the other quotes I received. And you DON'T need to worry. I will recommend him and use him again
Prepared the documents to submit for a tax appeal and accompanied me to the tax appeal hearing to present my case. I have used American Realty Appraisals twice and have won my tax appeal each time.
I was appealing my real estate taxes and American Reality did an appraisal on my home. The appraisal went well and as a result the tax appeal was successful and our real estate taxes were lowered.
I was ignoring go through Tax appeal process because I thought it was so cumbersome with very little chance of winning. In this process, I used Evan for a tax appeal. Not only we won but it was very easy and simple process between him and the lawyer. I highly recommend to use Evan, he knows what he is doing!
The tax appeal through you and Lisa Walsh was successful, and you may use me as a reference any time in the future
Evan was great. He was instrumental in helping me to appropriately lower my taxes via an accurate appraisal. I highly recommend his services to anyone in need of an appraisal in NJ.
When the interest rates dropped last year, I decided that it was a good idea to refinance my mortgage. I was recommended to American Realty Appraisals by my mortgage company. They were affordable, expedient, and ultimately put together a very comprehensive report with figures, photos, and local comps. I would highly recommend them to anyone looking for a professional and honest appraisal company.
Evan and his team at American Realty Appraisals are simply the best at what they do. As a mortgage banking professional, I have worked with dozens of appraisal firms over the years and I continually return to American Realty Appraisals when I can for their expert advice and service. I would highly recommend them if you are an individual looking to have your home appraised, or a banker looking to add a high quality appraisal firm to your list of approved appraisers.
Before I went to list my home, I hired Evan at American Realty Appraisals. I wanted an unbiased opinion of what my home was worth. He provided a thorough report that gave me piece of mind and a leg to stand on when it comes time to negotiate. I was also pleased with how fast he turned the report around after the inspection.
I am an attorney in Westfield and I refer all of my clients to American Realty Appraisals. I have worked closely with Evan Siegel for the past two years and I have been impressed with his professionalism, integrity and expertise as an appraiser. Relying on his appraisals, I have been able to negotiate property tax reductions for numerous clients in Union County. I highly recommend American Realty Appraisals for all of your residential real estate appraisal needs.
ARA did a great job of handling my tax appeal. The guidance was spot on and the staff, specifically, Evan Siegel, was professional and knowledgeable. The outcome was excellent and I'm saving a good amount of money on my real estate taxes. Thanks ARA!!
I used Evan for a tax appeal project. It was a seamless operation between him and the lawyer. Zero blips, and we won.
Mr. Siegel performed an appraisal for my home for tax appeal purposes. He was very professional and helped me lower my taxes by 17%. I am quite satisfied with his work.
Highly recommend. Excellent service, professional, prompt. Great result