How appraisers determine how much a property is worth
Whether you want to buy or sell a property, the appraisal process can determine what decision you make.
In Texas, each County Appraisal district is required to do an appraisal of the properties within their district every 3 years.
It is also important to remember that the value of your property determines the amount of property taxes you will pay each year, so you really want to make sure that you get a fair appraisal, and being aware of how the process works and what techniques appraisers use can be really helpful.
You can find more information on how appraisal works and appraisal experts in your county in this link.
There are three main ways appraisers calculate the value of your property.
Market Approach
This approach evaluates the market in the area where the property is located and makes tweaks taking into account the differences between the properties. This means, they look at properties recently sold and based on a Comparative Market Analysis (CMA), they make their appraisal after making adjustments depending on determining factors.
Income Approach
In this method, appraisers look at income and expense data to calculate the present worth of future benefits. Doing this, they try to determine how much a future investor would pay today for the possible revenue the property will generate in the future.
Cost Approach
This last method calculates how much it would cost to replace the building on the property with another building of equal utility with certain improvements. Depreciation, which is the process used to deduct the costs of buying and improving a rental property, is factored in and it is added to the value of the land.
Some other factors
Appraisers do take other things into account. This includes:
- The condition of the property both of the exterior and interior.
- The size of the property.
- The home improvements made.
If you feel overwhelmed and need guidance through the process, you can reach out to our experienced realtors and property managers that will happily help you through every step of the way!
