Real Estate Appraisal

Real Estate Appraisal



Real estate appraisal
Real estate appraisal – is​ that the​ real one?
Real estate appraisal or​ property valuation is​ the​ process of​ determining the​ value of​ the​ property on the​ basis of​ the​ highest and​ the​ best use of​ real property (which basically translates into determining the​ fair market value of​ the​ property) .​
The person who performs this real estate appraisal exercise is​ called the​ real estate appraiser or​ property valuation surveyor .​
The value as​ determined by real estate appraisal is​ the​ fair market value .​
The real estate appraisal is​ done using various methods and​ the​ real estate appraisal values the​ property as​ different for​ difference purposes e.g .​
the real estate appraisal might assign 2 different values to​ the​ same property (Improved value and​ vacant value) and​ again the​ same/similar property might be assigned different values in​ a​ residential zone and​ a​ commercial zone .​
However, the​ value assigned as​ a​ result of​ real estate appraisal might not be the​ value that a​ real estate investor would consider when evaluating the​ property for​ investment .​
In fact, a​ real estate investor might completely ignore the​ value that comes out of​ real estate appraisal process .​
A good real estate investor would evaluate the​ property on the​ basis of​ the​ developments going on in​ the​ region .​
So real estate appraisal as​ done by a​ real estate investor would come up with the​ value that the​ real estate investor can get out of​ the​ property by buying it​ at​ a​ low price and​ selling it​ at​ a​ much higher price (as in​ the​ present) .​
Similarly, real estate investor could do his own real estate appraisal for​ the​ expected value of​ the​ property in, say 2 years time or​ in​ 5 years time .​
Again, a​ real estate investor might conduct his real estate appraisal based on what value he/she can create by investing some amount of​ money in​ the​ property i.e .​
a​ real estate investor might decide on buying a​ dirty/scary kind of​ property (which no one likes) and​ get some minor repairs, painting etc done in​ order to​ increase the​ value of​ the​ property (the value that the​ real estate investor would get by selling it​ in​ the​ market) .​
So, here the​ meaning of​ real estate appraisal changes completely (and can be very different from the​ value that real estate appraiser would come out with if​ the​ real estate appraiser conducted a​ real estate appraisal exercise on the​ property).
A real estate investor will generally base his investment decision on this real estate appraisal that he does by himself (or gets done through someone) .​
So, can we then term real estate appraisal as​ a​ really real ‘real estate appraisal’?




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