Ever look around the inside and outside of your property and wondered how your property is appraised? Or what an appraisal is, and how it ties into finding out how much your home is worth?
An appraisal is an opinion of value and does not necessarily reflect a “set in stone” true valuation of your residential or commercial property. Primarily used in making sale price decisions, individuals or a trusted advisor usually orders an appraisal, which can take anywhere from mere hours to several days to compute.
Methods of Computing Value
Three different methods of appraising property exist; each has a different function and may be used for taxation, zoning or transaction purposes:
- Cost Approach, which leverages cost data so appraisers can develop cost manuals and depreciation schedules;
- Direct Sales Approach, which uses sales data so appraisers may establish “benchmark” properties for comparison purposes and develop appropriate adjustments used in the sales comparison analysis; and,
- Income Approach, which the appraiser can use to help develop economic rents, expense allowances. It can also be used to establish discount and recapture rates.
The reconciliation process attempts to resolve differences in the results of the three approaches based on the reliability and credibility of the data, and tie into how your property is appraised. The reconciliation of the three approaches tends to be different depending on the type of property being appraised and helps to define (down the road) what your home may be worth on the open market.
Data appraisers collect
Illinois residential appraisers collect data to be used in their final valuations. Some of the collected data includes:
- Actual construction cost data
- Market data publications and informational data bases
- Mapping changes and surveys
- Aerial photographs
- Protest hearings & informal interviews with property owners
- Deed activity (including mechanic liens)
- Verified sales of properties
- Information obtained from on-site inspections
- Building permits
- Discovery forms
- Survey letters sent to buyers and sellers
- Fee appraisals
- Closing statements
- Aerial photography
Will County and Cook County can aggregate MLS data which can provide information on sold properties as well as properties listed for sale. District staff collects information from other sources including neighbors, the internet, real estate agents, property owners, brokers,
Once all data is collected, most appraisers will feed the data into a specialized software program. From there, a figure is outputted. An explanation as to how the program arrived at their figure is generally given, too.
That is a general breakdown of how your property is appraised, although it is not the “be all, end all” of the appraisal process.