There’s a solid reason behind calling the final property appraisal an ‘estimate.’
It can be a daunting task, trying to keep the balance between the art and science elements behind real estate evaluations.
However, there are ways to put together a concrete luxury property appraisal. In addition to avoiding the erasure of the uniqueness of the property itself.
Worried about how to properly conduct a luxury property appraisal? You’ve come to the right place.
Keep on reading to learn all there is to know about appraisals for your luxury property.
Valuing the Home: The Luxury Property Appraisal
The starting point of any sort of real estate appraisal is taking a thorough look at the industry appraisal tools.
Traditionally, you’ll find that appraisers gravitate towards three valuation tools. These are the sales comparison approach, the income approach, and the cost approach.
For residential appraisals, you should lean towards the Sales Comparison Approach (SCA) as it’s the most widely accepted and reliable indicator of home value.
The first step after selecting the right appraisal tool is inspecting the property.
This includes drawing the floor plan, calculating the square footage, and establishing the property’s condition. Afterward, you can easily identify the highest-valued features of your property.
Great characteristics of a house can be views, pools, decks, home theaters, location, and proximity to the shopping centers. All of those can be added as critical components of property valuation.
In addition, you must take a close look at construction quality, as well as the quality of appliances and interior features.
Finding the Right Comps
Next step, finding the right comparables (comps).
Once you have your list of property features, you can move on to the comps-hunting stage.
The industry standard is getting comps that are ‘not-older-than-six-months’, however, this might not always be a feasible option.
If finding the right comps cause you a bit more trouble than its worth, you can shift gears and use the Cost Approachinstead.
You can start by using various online data tools. Manuals like the National Building Cost Manual can help determine the replacement cost of improvements for all of your property’s features and amenities.
On the other hand, it’s essential to keep in mind that the cost approach might not be as accurate as you’d like it to be. Especially, in cases of large custom luxury homes.
This is due to the construction cost manual’s focus on the replacement cost instead of the reproduction cost.
Regardless of which valuation tool you decide on using, you’ll end up with a final value estimate. This estimated value is the bedrock of your luxury home’s final valuation.
Ready to Get Your Custom Luxury Home?
Getting a luxury home property appraisal isn’t a task for the faint of heart. But, the benefits of owning your own custom luxury home are truly immeasurable.
After learning all about value estimation for luxury property, make sure you learn everything there is to know about buying your luxury home.