What Is Taken Into Consideration for Appraising a Totally Custom Home?

Comparable Sales

• The real estate appraiser will most likely look at comparable sales. If the property is unlike any others in the area, the real estate appraiser will try to get as close as possible with the comparables. Then the real estate appraiser will add value to the house for features that it has which the other houses do not have. The appraiser will also subtract value for features that the property does not have that the comparables do have.
  
  

Cost Approach

• One of the most valuable tools that the real estate appraiser has when trying to appraise a one-of-a-kind property is the cost approach. With the cost approach, the real estate appraiser will look at every aspect of the house and then try to come up with an accurate cost of how much it would be to reproduce the house. The appraiser will add all of the individual components in today's costs and then subtract an amount for depreciation on the property.
  
  

Evaluate Income Potential

• In some cases, real estate appraisers rely on the income approach to determine the value of a one-of-a-kind property. This is most effective when dealing with commercial property that is unlike other commercial property. With the income approach, the real estate appraiser looks at the property from the perspective of how much money it could generate. The amount of income that the property can generate is then multiplied by a valuation multiple to come up with a value for the property.
  
  

Considerations

• A real estate appraiser has to pay close attention to detail. He must look at all of the factors that contribute to the value of the property. Otherwise, the appraiser may come up with a value that does not represent the true value of the property on the market. Real estate appraisal is somewhat subjective, so two appraisers could come up with two totally different values for a property.