PROFESSIONAL APPRAISAL Nothing determines the sale price of a piece of real estate but the price at which it sells . Houses are not same-priced identical cans of tuna on the grocery store shelf or shares of stock valued and traded every day on the stock exchange. Real estate appraisal (“property valuation”) is the process of developing an opinion of value for real property. This is the market value — i.e., what a willing reasonable buyer would pay for the property to awilling reasonable seller. Real estate transactions generally require appraisals because they occur infrequently on a given property and every property is different or unique in features and characteristics. An appraisal helps in various decision points. The seller can use the appraisal as a basis for pricing. The buyer can use it as a gauge on which to base an offer. Lenders use appraisals to know how much money to credit to their borrowers. The important factors in a house appraisal are: • Dwelling type (e.g., one-story, two-story, split-level, factory- built) • Features (including design) — materials used and the kind of structure present and how they were built • Improvements made • Comparable sales • Location — type of neighborhood, zoning areas, proximity to other establishments • Age of property • Size • Depreciation Condition, of course, is a crucial factor in valuation. Location is also a factor; however, as property cannot change location, upgrades or improvements to a residential property often can enhance its value.
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