Real estate appraisal is the development of an opinion about the value (market value) of any real property. Each real estate property is unique and hence it is prudent for any buyer to seek the services of a real estate appraiser to give them an opinion of the property’s value before entering into any sale-buy agreement with the owner. It can be frustrating to enter into a buy contract and pay some deposit on some deposit on for a real estate appraiser to tell you that the value of the property is less than what you had agreed to offer on the property and this can cause the bank to decline granting you a mortgage.
Unlike other properties that are traded frequently, transactions pertaining to real estate are infrequent and hence their prices vary a great deal. There are many factors that may affect the price of real estate property. A few of the factors are unique to each property while others are same across the board. These variables include; location, surrounding properties, demand, condition, age of the property, among others.
To most people, location is the most important consideration when buying real estate property. Location is not necessarily the actual place where the land is located but is determined by other micro-factors such as its proximity to amenities. You might find that real estate properties situated in areas that have access to various amenities are valued higher than those properties whose access to such amenities is limited. For instance, properties situated in places with access to quality local schools can attract many buyers with school going children and this will increase demand for such properties hence their market values may be higher. Likewise places with proximity to local employment opportunities may attract higher prices.
The surrounding properties also play a key part in deciding the value of any real property. If the property is located in wealthy neighborhoods, then its value may be greater. Also the demand of estate property will determine its value. Whether there are lots of prospective buyers with interest in a particular real estate, then its value might be greater compared to one with few potential buyers. In property evaluation, there are various sorts of value and definitions that an appraiser looks at. These include; worth in use, market value, investment value, liquidation value and insurable value.
Market value off real estate property is the price at which such property can trade at a competitive real estate market. Basically, market value is the projected amount a liability or asset can be exchanged at on a particular valuation date between a willing buyer and willing seller. Value in use on the other hand is the amount of money a real property can generate for the owner for a particular use. Likewise, investment value is the worth of a property to a particular investor for a specific investment or use. Insurable value of a property denotes the quantity of money of the property covered by an insurance policy and doesn’t usually involve site value.