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Appraisal
Basics An appraisal of real estate is the valuation of the rights of ownership. The appraiser must define the rights to be appraised. The appraiser does not create value the appraiser interprets the market to arrive at a value estimate. As the appraiser compiles data pertinent to a report, consideration must be given to the site and amenities as well as the physical condition of the property. Considerable research and collection of data must be completed prior to the appraiser arriving at a final opinion of value.Using three common approaches, which are all
derived from the market, derives the opinion, or estimate of value. The first
approach to value is the COST APPROACH. This method derives what it would cost
to replace the existing improvements as of the date of the appraisal, less any
physical deterioration, functional obsolescence and economic obsolescence. The
second method is the COMPARISON APPROACH, which uses other "bench
mark" properties (comps) of similar size, quality and location that have
recently sold to determine value. The INCOME APPROACH is used in the appraisal
of rental properties and has little use in the valuation of single family
dwellings. This approach provides an objective estimate of what a prudent
investor would pay based on the net income the property produces.
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Disclosure
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