Real estate appraisal refers to the opinion on the value of a real estate property by an appraiser. Because of the uniqueness of each real property, it is important to find a real estate appraiser to give you an opinion about the property’s worthiness before entering or signing in buy contract. It can be frustrating for you to make a down payment on a certain property only for the appraiser to tell you that the property’s worthy is less than what you had agreed upon to pay.
Contrary to other properties which are traded frequently, real estate transactions are less frequent hence there is a greater need to carry an evaluation of the property before making any transactions so as to reflect its market value. There are lots of aspects that may 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 per se doesn’t mean the actual place where the property is situated but is determined by other micro-factors such as proximity to various amenities. You may find that real estate properties situated in places which have access to various amenities are appraised higher than those whose access to such amenities is not all that rampant. 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. Properties located in places accessible to local employment opportunities are also rated higher in value.
The surrounding neighborhood also plays an integral role in determining the value of any real property. If the property is found in rich neighborhood, then its value may be higher. Also the market demand of real estate property will determine its value. If there are lots of prospective buyers interested in any specific real estate, then it may attract higher prices as compared to those with few prospective buyers. In real estate appraisal, there are various types of value that an appraiser looks at. These include; market value, value-in-use, 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 estimated amount of money a liability or asset could be traded at a particular valuation date between willing seller and willing buyer. Value-in-use is the actual amount of money a true property can generate for the proprietor for a specific use. On the other hand, investment value is the value of a real property to a specific investor for a particular investment. Insurable value of a property refers to the amount of money of the property covered by an insurance policy and does not generally include site value.