Thursday, November 17, 2011

How To Appraise The Value Of A House

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The first step in appraising the value of a house is to obtain a sales printout of all houses that have sold in the suburb during the past six months. There will be a State government authority that sells property sales information to the public. Just do a Google search to find the authority in your State. These days they will most likely have a website and you will be able to purchase the sales data online.

The next step is to inspect the house you want to appraise. You will most likely want to assess the value of the house as it is for sale and you want to buy it. Arrange an inspection time with the agent or owner.

When you first arrive at the inspection, note the age, construction, size and condition of the house. When looking inside look through every room noting the condition of floor coverings, paint work and fittings. Remember how many bedrooms and bathrooms there are. Pay particular attention to the age and condition of the kitchen and bathroom(s) as these are the most expensive rooms in a house.

Finally have a good look at the landscaping and the condition of the fencing. Make sure you look at any of the views the property may have.

Other things to be on the lookout for are signs of pest infestation, water damage, dry rot and whether or not the house frame appears straight and true. Check for signs of rust in the roof and guttering.

When you feel you have seen enough, make sure you know the asking price for the house, thank the owner or agent and leave. Do not enter into any negotiations.

Now you are ready to appraise the value of the house. Check your property sales data printout you obtained from the State government authority and pick out sales that are within plus or minus 10% of the asking price. The sales printout should have a photo of the house that sold so try to pick houses of similar age and construction to the house you are appraising. The sales printout should give you the address, sale price and date of sale. Try to pick at least three similar houses and go to their address and inspect the outside of the house from the street. 

As you will not be able to inspect the interior of the house you will have to assume the exterior condition reflects the interior condition.

By now you should have a fairly accurate idea of what the fair market value of the house really is. You can usually assume that the asking price is highly inflated so make allowances for that. Now is the time to enter into negotiations with the owner or agent if you are still interested in buying the house.