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WHY HAVE AN APPRAISAL? |
- Real estate appraising is a complex field. The sale of your home, business or any real property: may be the largest transaction of your lifetime. Appraisers’ opinions can play an important part in almost any real estate transaction. For this reason, an Independent Appraiser should be consulted.
- The appraiser does not create value. The appraiser interprets the market to arrive at a value estimate. As the appraiser compiles data pertinent to a report, consideration must be given to the site and amenities as well as the physical condition of the property. An appraiser may spend only a short time inspecting the property, however, this is only the beginning.
- An appraisal of real estate is the valuation of the rights of ownership. The appraiser must define the rights he intends to appraise.
- Considerable research for collecting general and specific data must be accomplished before the appraiser can arrive at a final opinion of value.
- Appraisals are obtained for several reasons, including to:
- Settle an estate
- Establish replacement cost for insurance
- Establish just compensation for condemnation
- Contest high property taxes
- Determine an offering or selling price
- Obtain a loan
>> An appraisal is an opinion of value or the act or process of estimating value. This opinion or estimate is derived by using the three common approaches, all derived from the market. They are:
- Cost Approach to value is what it would cost to replace or reproduce the improvements as to the date of the appraisal
- Comparison Approach to value makes use of other “bench mark” properties of similar size, quality and location that have recently sold
- Income Approach to value is of primary importance in ascertaining the value of income-producing properties.
>> The Appraiser determines which approach or approaches are applicable.
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