As defined by Wikipedia, a real estate appraisal, property valuation or land valuation is the practice of developing an opinion of the value of real property, usually its market value. Market value is the price at which an asset would trade in a competitive Walrasian auction setting.
Appraisals are necessary especially when investing in property because no two properties are exactly alike and therefore there is no market-based pricing mechanism. It is the unique features, locations and conditions of properties that require the need for the appraisal/valuation of real estate property.
There are three basic approaches to the appraisal process. The Cost Approach uses the current cost of the property less the accrued depreciation including deterioration, neglect, etc. The Sales Comparison Approach is based on the value of comparable properties that have recently sold in the area. (You can find free recent sales comparables on RealUp). The Income Capitalization Approach is the market value of the properties earning potential upon capitalizing on income, stability and equity.
RealUp has a significant group of members that are in the commercial appraisal industry. Appraisers find our website very useful specifically because we offer free nationwide recent sales comparables.
If using the Sales Comparison Approach that I mentioned above, this access to free sales data is a tremendous resource for appraisers especially in this slow market. Click here to search our nationwide sales comp database for free.
Do you want to learn more about the appraisal process or find a certified appraiser? Check the Appraisal Institute, the international association for professional real estate appraisers. Formed in 1991, the Appraisal Institute has more than 24,000 members and 91 chapters.
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