Appraisal for investment property more expensive

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Appraisal for investment property more expensive

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Question:

I am buying my first investment property. Why is the ppraisal for this investment property more expensive than for my own place?

Answer:

For owner-occupied properties, these days the appraiser usually uses the market comparison approach. The appraiser will look at recently sold homes in the same area and make adjustments upwards/ downwards and come up with a price that this place should sell for.

For investment properties I have seen appraisers use the market comparison approach and additionally, they look at the rental income (Income Approach) and at the construction cost (Cost Approach).

They come up with 3 values using those 3 approaches and average them somehow.

The additional work means additional cost. My last appraisal cost me $375 and it included all 3 methodologies. An appraisal in the same county for a vacation home cost me only $275.

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