Real estate appraisal refers to the opinion on the value of a real estate property by an appraiser. 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.
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 many factors that may affect the price of real estate property. A few of the factors are unique to each property while others are same across the board. These variables include; location, surrounding properties, demand, condition, age of the property, among others.
To most people, location is the most important consideration 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 example, properties situated in areas with access to local quality learning institutions may attract many buyers with school going children and this will increase demand for such properties consequently their market values may be higher. Properties located in places accessible to local employment opportunities are also rated higher in value.
The surrounding properties also play a key part in deciding the value of any real property. If the house is located in wealthy neighborhood, then its value might be higher. Also the demand of real estate property will ascertain its worth. 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; worth in use, market value, investment value, liquidation value and insurable value.
Market value off real estate land is the cost at which such land can exchange 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 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 property to a particular 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.