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Real-Estate-Appraisal Knowledge That Can Give You the EdgeReal-estate-appraisal is the act of determining current market value of real property based on information and input from the buying public. Conducted by a licensed real estate appraiser, the appraisal attempts to estimate the value of a property based on the appraiser’s findings and presented in a format call the appraisal report.
To be effective, the appraisal is based on facts and objective criteria of the real estate appraiser and not subject to personal opinion.The real estate appraisal estimates value based on supportable and clearly defined data. There are several types of values determined by the real-estate-appraisal: 1. Fair Market Value – In an open market Fair Market Value is the most accepted value buyer and seller are willing to accept. Each having readily available data and acting prudently under existing market conditions. 2. Mortgage (Loan) Value – Seen from the perspective of the lender, who expects to use the property as security for a pending loan. Mortgage value tend to be a conservative interpretation of value. 3. Trading Value – This value is seen from the perspective of one wanting to exchange one property for another or in exchange for securities. Tax considerations are also applicable. 4. Investment Value – Meant mainly for income producing property such as commercial buildings and apartments as well as single family homes, valuation is based on the investor’s opinion of a particular property, rather than objective market standards. 5. Book Value - This value is for the most part the original purchase price of the property with any improvements minus depreciation. It applies to property that is purchased for investment purposes and is considered an accounting terminology. 6. Insurance Value – Fire or casualty insurance is determined by insurance valuation. 7. Assessed Value - Tax assessor assigns this valuation to real property. As a seller, it is important not to have appraisals based on assessed value. Invariably, it could considerably less than the accepted Fair Market Value of the property. 8. Rental Value – This valuation is usually requested from lending institutions on foreclosed property they own or from investors. It is the acceptable rental value or income the property should generate in the open market. 9. Liquidation Value - This is the value of a property when subject to liquidation or forced sale. Typically, the lender or owner has encountered adverse market conditions and wants immediate cash to meet obligations. Since Fair Market Value conditions are not being met, property is sold at substantial discount. 10. Salvage Value - When a building or structure is to be torn down or moved, this valuation is used. This typically applies to old house ready to be torn down and replaced or a structure to be moved to another location. “Scrap Value” is also used in this context when pieces of a building are sold as scrap.
This list of values represents the more common types encountered. Other valuations are used based on its intent. As you can see, real-estate-appraisals vary widely. It is important to know the use of the appraisal to determine the type that is appropriate. The real-estate-appraisal are done on real property or real estate. It does not include personal property that is not attached to the home or structure.
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