How Properties and Businesses are Valued

There are many reasons as to why a business would need an appraisal value. One of them may be to assess the property tax of the business or property. If property tax is not known, there is a possibility that a business owner may fail to take advantage of tax benefits that he or she may be eligible to. On the other hand, there is always the possibility of over or under taxation occurring, which in both cases, will not be good for you. Sometimes, an appraisal value will also be useful when confirmation is needed to ensure adequate collateral is on hand, for example, in case of mortgages. Financial institutions will usually not hesitate to ask for formal valuation of properties before they can accept collateral. Having this information well in advance will save you both time and money when such collateral information is needed.

Before the value of a property or business can be stated, appraisers and assessors are expected to write detailed reports on their gathered research as well as on-site observations. They are also expected to write the precise reasoning and methodology that they used to come up with the property or business value. Since some of this writing is done on-site, extensive use of electronic maps and computer data is necessary to give correct estimates. In addition, pictures may need to be taken to document a feature or exteriors or look of the property. Other things that are taken into consideration and that determine the property value are the lease records, view, location, income potential, comparable home sales and previous appraisals.

To come up with the appraisal value, appraisers and assessors must work together. While appraisers focus solely on property valuing one at a time, assessors on the other hand are responsible for property valuing for tax assessment purposes. Assessors use mass appraisal techniques to value entire neighborhoods at one time. In some cases, when a property owner challenges an assessment, they may assess single properties. This revaluing is usually done annually or after several years in most jurisdictions. The appraisal value is them used to determine the property tax that each owner should pay.

All valuations of real property are done the same way and use similar methods regardless of the appraiser, assessor or the type of property. Most appraisers and assessors work in localities where they are familiar and thus have a good knowledge of environmental and developmental issues which may affect the appraisal value of a property.