The Appraisal
What is an appraisal?
When you hire a designated appraiser, you are hiring a dedicated professional that will work for you. The appraiser will provide an objective estimate or opinion of value of the described property, as supported by the presentation of relevant data analysis.
Steps in the Appraisal Process
- Definition of the Problem
- Preliminary Survey and Appraisal Plan
- Data Collection and Analysis
- The Direct Comparison Approach
- Cost Approach
- Income Approach
- Reconciliation of Value Indications and Final Estimate
- Write the Appraisal Report
All reports will demonstrate either one or more of the three data processing methods used to arrive at an indication of value.
- The Direct Comparison Approach is based on the theory that an informed purchaser would pay no more for the property than the cost of acquiring another existing equivalent property. The value estimate is based on the selling price of comparable properties.
- The Cost Approach estimates the cost of building new property identical to the subject being appraised, at current prices, subtracting accumulated depreciation and adding the estimated land value.
- The Income Approach is used for income-producing property and is based on the theory that value is the present worth of the income stream the property is capable of producing when developed to its fullest use. The net operating income from the property is capitalized into value by an appropriate method and rate.
