500 6th Street
Sioux City, IA 51102 
712-277-1070

Common Sense Guide to Appraisals:
 
Why Do I Need An Appraisal?  
The basic purpose of an appraisal is to help in making a real estate decision.  An appraisal could be needed in any of the following situations: 
 
  • Setting a price for buying or selling.
  • Setting collateral value for financing.
  • Assisting in a refinancing decision.
  • Determining just compensation in condemnation proceedings.
  • Assisting in real estate and personal income tax matters.
  • Setting rent schedules and lease provisions.
  • Determining the feasibility of a project.
  • Estimating the price for a corporation's purchase of a transferred employee's home.
  • Assisting in insurance matters.
  • Estimation liquidation value for forced sale or auction proceedings.
  • Determining supply and demand trends in market. 
 
  
What is Market Value?
Market value is the most probable price for which the property should sell after reasonable exposure in a competitive market with a willing and knowledgeable buyer and seller and assuming a fair and normal sale with no undue pressure upon either party. 
 
 
Is There A Difference Between Selling Price and Value?
Sometimes.  Every day some properties sell at a price which is above or below the normal market value.  A professional appraisal is an unbiased estimate of value which includes an analysis of past and current sale prices. 
 
  
How Does One Determine Market Value?
Three different methods are generally used in the appraisal process.  A brief description of each follows:
 
  • Cost Approach:  This method involves estimating building cost and deducting for wear and tear, design flaws or location problems.  Land value is added to this building cost to derive a value estimate. 
  • Sales Comparison Approach:  This method is the most commonly utilized.  This approach compares the subject property with somewhat similar properties which have recently sold.  Adjustments for differences such as overall square footage, condition and location lead to value indication. 
  • Income Approach:  This method analyzes the value of the property based on its ability to produce net rental income.  The income approach is seldom used in appraisals of single-family residences. 
  
Does the Tax Assessment Indicate Current Market Value?
Not always.  There is anywhere from a one to two year time lag between the assessment work and publication of assessed value.  Assessors appraise hundreds or even thousands of properties in a year.  They are not always able to inspect the property and frequently can spend only a few minutes work on each valuation.  While many properties sell at a price above the assessed value, some sell below the assessment. 
 
  
 Does Adding to or Renovating My Property Increase the Value?
 In most cases, when additions are made  or renovations take place, the value will increase.  However, the cost of addng the item is not always equal  to the value that the item contributes to the total property value.  It will depend on the area, the market demand, quality of construction, workmanship, etc.