A Quick Breakdown:

Posted July 23rd, 2016

Purchasing real estate can be the most significant transaction many people will ever make. Whether it’s a family home, a seasonal vacation home, or one of many rentals, the purchase of real estate property is a detailed financial transaction that requires multiple people working in concert to make it happen.

Inspecting the Property

Our first task at R.E. Appraisal Associates of SWFL, Inc. is to inspect each property to ascertain its true status. Our appraisers must physically view aspects of the property, such as the number of bedrooms and bathrooms, the location, and so on, to ensure they are present and are in the shape a person would expect them to be.

To ensure the stated size of the property has not been misrepresented, and convey the layout of the home, the inspection often includes creating a sketch of the floor plan. Most importantly, the appraiser looks for any obvious features – or defects – that would have an impact on the value of the house.

After the inspection, an appraiser employs two or three approaches when determining the value of the property: a sales comparison, a replacement cost calculation, and an income approach when rental properties are prevalent.

Cost Approach

Here, we analyze information on local construction costs, the cost of labor and other elements to determine how much it would cost to construct a property similar to the one being appraised. This figure commonly sets the maximum on what a property would sell for. It’s also the least used predictor of value.

Determining the cost value of the property is essential for lenders to determine if loaning is appropriate for the specific house or renovation. Without it, lenders have no way of comparing and ensuring that the loan is correct for the application.


Appraisers can say a lot about the subdivisions in which they work. They innately understand the value of particular features to the homeowners of that area. Then, the appraiser researches recent sales near the subject and finds properties which are ‘comparable’ to the subject in question. Using knowledge of the value of certain items such as upgraded appliances, additional bathrooms, additional living areas, quality of construction, and lot size, they add or subtract from each comparable’s sales price so that it more accurately portrays the features of subject property.

If, for example, the comparable property has an extra half bath that the subject doesn’t, the appraiser may subtract the value of that half bath from the sales price of the comparable home.In the case where the subject has something such as an extra half bath that a comparable doesn’t have, the appraiser might add the value of that bath to the comparable property. This approach to value is typically awarded the most weight when an appraisal is for a home purchase.


A third method of valuing approach to value is sometimes applied when an area has a reasonable number of renter-occupied properties. In this situation, the amount of income the real estate produces is taken into consideration along with income produced by neighboring properties to give an indicator of the current value.

When it comes to knowing the true value of features of homes in Punta Gorda and Charlotte, R.E. Appraisal Associates of SWFL, Inc. is second to none. Please feel free to give us a call, or drop by for more information.