Real estate evaluation is the development of an approximation about the value (market value) of any real property. Because of the uniqueness of every real property, it is very important to seek for the services of a real estate appraiser to give you their opinion on the market value of the property before signing any buy agreement. It can be frustrating to enter into a buy contract and pay some deposit on some deposit on for a real estate appraiser to tell you that the value of the property is less than what you had agreed to offer on the property and this can cause the bank to decline granting you a mortgage.
Unlike other properties that are traded frequently, transactions pertaining to real estate are infrequent and hence their prices vary a great deal. There are many factors that may affect the price of real estate property. Some of these factors are unique to each property while others are uniform across all real estate properties. These variables include; location, neighborhood, market, age, condition, amongst others.
To most people, property location is the most important factor they consider when buying real estate. Location is not necessarily the actual place where the land is located but is determined by other micro-factors such as its proximity to amenities. Properties located in places which have access to various social amenities are appraised higher than those situated far away from such amenities. For instance, properties located in places with access to quality schools attract many high-caliber buyers with school going children and this will increase demand for such properties thus essentially leading to higher prices. Likewise places with proximity to local employment opportunities may attract higher prices.
The surrounding neighborhood also plays an integral role in determining the value of any real property. If the house is located in wealthy neighborhood, then its value might be higher. Also the demand of estate property will determine its value. Whether there are lots of prospective buyers with interest in a particular real estate, then its value might be greater compared to one with few potential buyers. In real estate appraisal, there are various types of value that an appraiser looks at. These include; market value, value-in-use, investment value, liquidation value and insurable value.
Market value off real estate land is the cost at which such land can exchange at a competitive real estate market. Basically, market value is the estimated amount of money a liability or asset could be traded at a particular valuation date between willing seller and willing buyer. Value in use on the other hand refers to the amount of money a property can create for the proprietor for a specific use. On the other hand, investment value is the value of a real property to a specific investor for a particular investment. Insurable value of a property denotes the quantity of money of the property covered by an insurance policy and doesn’t usually involve site value.