Appraisal Basics:
An appraisal of real estate is the
valuation of the rights of ownership. The appraiser must define the
rights he intends to appraise. 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. An appraiser may spend only a short time inspecting
the property, however, this is only the beginning. Considerable
research and collection of general and specific data must be
accomplished before the appraiser can arrive at a final opinion of
value. Real Estate for sale in Coconut Grove.
Due to the many types of value, such as
Fair Market Value, Insurance Value, Tax Value and Value In Use, the
need to precisely define the purpose of the appraisal is essential.
Appraisal Methods:
An appraisal is an opinion of value or
the act or process of estimating value. This opinion or estimate is
derived by using three common approaches, all derived from the market.
They are:
1. Cost Approach to value
is what it would cost to replace or reproduce the improvements as of
the date of the appraisal, less the Physical Deterioration, the
Functional Obsolescence and the Economic Obsolescence. The remainder
is added to the Land Value.
2. Comparison Approach
to value makes use of other "bench mark" properties of similar size,
quality and location that have been recently sold. A comparison is
made to the subject property.
3. Income Approach to value
is of primary importance in ascertaining the value of income producing
properties and has little weight in residential type properties. This
approach provides an objective estimate of what a prudent investor
would pay based upon the net income the property produces. Then, after
thorough analysis of all general and specific data gathered from the
market, a final estimate or opinion of value is correlated. Homes for
sale in Coral Gables.
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