Study: My Understanding of Appraisals

Importance of Property Appraisal.

The term property appraisal has been used to refer the process of determining what a certain property is worth through the various appraisal methods. The term appraisal is used very much when to comes to residential, commercial and apartments. The appraisal process has been known to proceed the disposal process at any given time. The appraisal process is mainly carried out too determine how much a given property has depreciated since it was constructed. The appraisal process is practiced by already set organizations such as the Minneapolis commercial appraisal.

The appraisal process is normally carried out to determine the value of a property. The valuation process is carried out to determine the market value, the value-in-use and finally the investment value. Market value simply refer to the price at which certain property would be traded for at a competitive market setting. The term market price has also been used to refer to the estimated amount which an asset or liability should be exchanged on the valuation at a given time. The valuation at a given date is dependent on what price the buyer is willing to buy and at what price is the seller ready to sell the property.

The second value which is determined by the appraisal process or use value. The use value has also been described by another term which I the net book value. The use value has been used to described the cash flow that a given asset generates to a specific owner when it is utilized. The use value can either be below or above the market value.

The last value which is determined by the appraisal process is the investment value. Investment value is easily determined during the appraisal process as it refers to the value a certain investor has invested in a given property. The investment value is tends to be higher than he market. There are other minor values which are determined by appraisal process which include the insurable and liquidation values. The two minor values are not taken into much consideration during the appraisal process as the involve less amount of money.

The process of determining the various value of property can be carried out through various methods which include sales comparison approach, the cost approach and the income approach. The determination of a asset value through the sales comparison approach involves determining the value of a given property by comparing it to similar properties which have been sold in the near future. The cost approach method takes into consideration what price a buyer is willing to offer and it should not be above the current market prices..

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