Home refinance with bad credit & appraisalmethods
Home refinance with bad credit -Appraisal Methods
An appraisal of real estate is the valuation of the property based upon empirical data. It's an opinion of value.This opinion or estimate of value is arrived by using three common approaches. These are the appraisal methods used:
Cost approach to value
It takes into consideration what it would cost to replace or reproduce the property on the date the appraisal is conducted. It than subtracts the physical deterioration, the functional obsolescence and the economic obsolescence to arrive at the final conclusion of value.
Comparison approach to value
Takes into consideration the value of other 'similar properties' of the same size ,quality and location that have recently sold on the market under similar conditions. These properties are than compared to the subject property.This is the most common approach used in the appraisal process for real property valuations.
Income approach to value
This method of appraisal focuses in determining the value of income properties.The income approach provides an estimate of what an investor would pay based upon the net rent income the property produces.This is useful in 1 to 4 units or rental properties.
After a rigorous analysis of other properties a value is ascertained. This is tedious process and typically cost more than single family homes. Home refinance with bad credit requires the same process and there are no additional requirements.
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