Real Estate Appraisal

By
Mortgage and Lending with PREMIER NATIONWIDE LENDING, LAKE CHARLES LA.

estimate of the value of property, usually required when a property is sold, financed, condemned, taxed, insured, or partitioned. An appraisal is not a determination of value. Three approaches are used. To produce an accurate resale price for a residence, appraisers compare the price of the property to the prices of similar nearby properties that have sold recently. For new construction and service properties such as churches and post offices, appraisers look at the reproduction or replacement cost of the improvements, less depreciation, plus the value of the land. For investment properties such as apartment buildings and shopping centers, an estimated value is based on the capitalization of net operating income from a property at an acceptable market rate.

Real estate appraisalproperty valuation or land valuation is the process of valuing real property. The value usually sought is the property's market value. Appraisals are needed because compared to, say, corporate stock, real estate trades very infrequently. Not only that, but every property is different from the next, a factor that doesn't affect assets like corporate stock. Furthermore, all properties differ from each other in their location - which is an important factor in their value. So a centralized walrasian auction setting can't exist for the trading of property assets, such as exists to trade corporate stock (i.e. a stock market/exchange). This lack of frequent trading and product differentiation, unlike stocks, means that sometimes appraisers are needed to figure out a property's value. The appraiser usually provides a written report on this value to his or her client. These reports are used as the basis for mortgage loans, for settling estates and divorces, for tax matters, and so on. Sometimes the appraisal report is used by both parties to set the sale price of the property appraised.

In some areas, an appraiser doesn't need a license or any certification to appraise property. Usually, however, most countries or regions require that appraisals are done by a licensed or certified appraiser (in many countries known as a Property Valuer or Land Valuer and in British English as a "valuation surveyor"). If the appraiser's opinion is based on Market Value, then it must also be based on the highest and best use of the real property. For mortgage valuations of improved residential property in the US, the appraisal is most often reported on a standardized form, such as them Uniform Residential Appraisal report. Appraisals of more complex property (e.g. -- income producing, raw land) are usually reported in a narrative appraisal report.




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