Estate Appraisal

Real estate appraisal involves the evaluation of property to determine its real market value based on a number of factors. Since no 2 properties are identical, there can never be any market-based pricing mechanism to determine their worth. A real estate appraiser or an expert in real estate valuation is responsible for carrying out such surveys.

A real estate appraisal can be done to evaluate either market value of an asset, value-in-use, investment value, insurable value or the liquidation value of a real estate property. According to the International Valuation Standards (IVS), the market value is defined as Market Value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.

The value-in-use of a property is the cash flow the asset generates under a specific use and is usually below the market value of the property. When a user of such a property enjoys special benefits like extraordinary financing and agglomeration benefits, then the property take on an investment value. The liquidation value of a property is the price the asset is likely to get on the open market with a reduced exposure to potential buyers due to insufficient time on the market. This is usually significantly lower than the fair market value.

Estate appraisal for land or property is also determined by the land use, which, in turn, is dependent upon the demand and supply of the product the land is producing. Such evaluations are however done not only for determining the amount of cash a property will transact for on a particular date, but also for tax assessment, expropriation, investment and financing as well as for inheritance purposes among other reasons.

What are some of the methods used in real estate appraisal? Some of these include regression models, profit and contractors method and comparable. Advanced methods include hedonic pricing method, spatial analysis and fuzzy logic among other models. In order to get a reliable real estate appraisal, you will need to hire an appraiser, primarily one who works on a client-to-client basis and one who has specialized in your type of property. Preferably, look for one who is local to your area. Once an appraiser has evaluated the property and handled all the paper-work, then the value of your property can be determined.