The term appraisal of property has been widely used to refer to the process of developing the opinion about the value of tangible property. 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 too determine how much a given property has depreciated since it was constructed. Valuation of property requires individuals with valuation skills who have professional training and experience I the appraisal field.
The main reason for carrying out appraisal is to determine the value of a given property. Value as a term can be divided into three major categories which include the market value, value-In-use and investment value. The market value simply refers to thee price at which assets would trade in 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 process has been recorded to be to very much depended on the prices by which individuals are willing t offer in exchange for the property.
The second value which is determined by the appraisal process or use value. The use value is also referred as the net book value. The use value in details has been described as the cash flow that an asset generates for a specific owner when it put to a particular use. This value is never constant and has at point proved to be higher that the market value while at other points this value becomes low that the market value.
The last value which is determined by the property appraisal process is the investment value. Investment value has been used to refer to the value of a given investor. Unlike the value at use, the investment value I constant as it is always above the market value. There are other minor values which are determined by appraisal process which include the insurable and liquidation values. 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. Determination of the value of an estate or an apartment by use of the sales comparison approach involves comparing the value of a property with similar properties which have been recently sold. The cost approach method involves setting prices below the current market prices as a buyer cannot pay more than the market prices..