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 base 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
carries out 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 up 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 commonly center 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’?
ABOUT THE AUTHOR
Bob Schwartz, is a Certified Residential
Specialist, CA licensed real estate broker with
www.Brokerforyou.com. Bob
has over 27 years of residential real estate experience, authored a
number of published articles and served as an expert witness for
San Diego lawyers. You can contact
Bob via e-mail at bob@brokerforyou.com or visit his highly popular
San Diego real estate website at:
http://www.brokerforyou.com
------------
This work is protected under copyright and may not be published in
other works without express written permission from
Promotions Unlimited
or the following procedures are implemented: Please feel free to
publish this article (as long as no changes are made (all hyper-links
to remain and not be modified in any way) and the author's name and
site URL's are retained) in your ezine, newsletter, offline
publication or website. A copy would be appreciated at Click
here to email Bob
Back to San Diego downtown real estate article index |