Real
Estate Appraiser
Estimate of the value of property, usually required
when a property is sold, financed, condemned, taxed, insured, or
partitioned. An appraisal is not a determination of value. Three
approaches are used. To produce an accurate resale price for a residence,
appraisers compare the price of the property to the prices of similar
nearby properties that have sold recently. For new construction and
service properties such as churches and post offices, appraisers look at
the reproduction or replacement cost of the improvements, less
depreciation, plus the value of the land. For investment properties such
as apartment buildings and shopping centers, an estimated value is based
on the capitalization of net operating income from a property at an acceptable
market rate.
Real estate appraisal is the practice of developing an opinion
of the value of real property, usually its Market
Value. (Real estate appraisal is American usage; many other
countries use the terms property valuation or land valuation.)
The need for appraisals arises from the heterogenous nature of property
as an investment class: no two properties are identical, and all
properties differ from each other in their location - which is the most
important determinant of their value. So there cannot exist a centralised
Walrasian
auction setting for the trading of property assets, as there exists
for trade in corporate stock. The absence of a market-based pricing
mechanism determines the need for an expert appraisal/valuation of real
estate/property.
A real estate appraisal is performed by a licensed or certified
appraiser (in many countries known as a property valuer or land
valuer). If the appraiser's opinion is based on Market Value, then it
must also be based on the Highest
and Best Use of the real
property. For mortgage valuations of improved residential property in
the US, the appraisal is most often reported on a standardized form, such
as the Uniform Residential Appraisal Report.[1] Appraisals
of more complex property (e.g. -- income producing, raw land) are sually
reported in a narrative appraisal report.
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