Real estate appraisal is the development of an opinion about the value (market value) of any real property. Because of the uniqueness of every real property, it is very important to seek for the services of a real estate appraiser to give you their opinion on the market value of the property before signing any buy agreement. 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 which are frequently traded, real property transactions are infrequent. There are numerous factors that might impact the price of real estate property. Some of the factors are unique to each property while others are same across most properties. These factors include; location, neighborhood, market, condition, age among others.
To most people, the property’s location is the most important factor 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. Properties located in places which have access to various social amenities are appraised higher than those situated far away from such amenities. For instance, properties located in places with access to quality schools attract many high-caliber buyers with school going children and this will increase demand for such properties thus essentially leading to higher prices. Likewise places with closeness to local employment opportunities may be valued highly.
The surrounding neighborhood also plays a key role in determining the value of any real property. If the property is located in wealthy neighborhoods, then its value may be greater. Also the market demand of real 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 real estate appraisal, there are various sorts of value that an appraiser appears at. These include; value 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 refers to the amount of money a property can create for the proprietor for a specific use. On the other hand, investment value is the value of a property to a particular investor for a particular investment. 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.