Real Estate Appraisal

Definition

Real estate appraisal is the process of appraising and evaluating real property. Real estate appraisal is also known as land valuation and property valuation. In this type of appraisal, the market value of the property is usually required.

Need for real estate appraisal

Unlike corporate stock which is frequently valued, real estate appraisals are not done at regular intervals as their transactions do not take place regularly. Also, in real estate, each property is different from the other which is not the case with corporate stock. Not only that, the location of each property is different from the other and so each ones value is different from the other. For all these reasons, a centralized appraising cannot be done for the property assets trading, like they are done in corporate stock in stock market.

Because of irregular and infrequent trading and product differentiation in real estate, a qualified appraiser who specializes in real estate and property appraisal is needed to assess and find the value of the property. An appraiser’s task is to evaluate the property or home and present that in a written report. These real estate appraisal reports are needed for many purposes. Some of the purposes for which real estate appraisal is needed are related to settlement of divorces and estates, tax matters, mortgage loans and many more. Many a times, the real estate appraisal report is needed by the clients to set the price of the property for sale.

There are some places where an appraiser does not require any certification or license for appraising property. But, in most of the countries, appraisal of any property is needed to be done by an appraiser who is licensed and certified. The appraisers of real estate are known by various names like land valuer, property valuer and valuation surveyor.

For real estate appraisal, if it is done on the basis of market value then it should also be done on the basis of the highest and best use of real property. The appraisal report of improved residential property for mortgage valuation is usually done on standardized form and appraisal of property of complex nature is presented in narrative appraisal report.