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 property appraisal process is mainly carried out so as to determine how much a property is worth before disposing it off. The appraisal process is mainly carried out to carry how much a given property has depreciated over a given time. The appraisal process is practiced by already set organizations.
The main reason for carrying out valuation is valuation i.e. determination of the value of a property at a given time. Value as a term can be divided into three major categories which include the market value, value-In-use and 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 value has also been used to refer to the estimated amount which an asset or a liability should be exchange on the valuation at a given date. The valuation at a given date Is dependent on what buyers are willing to offer for a given property.
Another type of value determined by the appraisal is the use value. The use value is also referred as 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 is not predictable as it has at times been recorded to be above the market and at times to be below the market value. Investment value is another value that is determined by the property appraisal process. 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 always above the market value. There are two other types of values determined during the appraisal process i.e. the insurance value and the liquidation value. Insurance and liquidity values are not very much significant as the market, value in use and investment values.
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 sales comparison approach is carried out by comparing a properties characteristics with those of similar properties that have been sold in the near past. 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..