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 appraisal process is mainly carried out to residential buildings, commercial enterprises and apartments constructed for hire. This process has been carried out mainly one wants to dispose of old property. The process of estate appraisals been mainly carried out to determine how buildings and other resources in an estate have deprecated since construction. The appraisal process is practiced by already set organizations such as the Minneapolis commercial appraisal.
The main reason for carrying out valuation is valuation i.e. determination of the value of a property at a given time. Valuation is carried out in order to determine three types of value of a property 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 price has also been used to refer to the estimated amount which an asset or liability should be exchanged on the valuation at a given time. 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.
Another type of value determined by the appraisal is the use value. The use value has also been described by another term which I the net book value. The use value has been used to described the cash flow that a given asset generates to a specific owner when it is utilized. The use value can either be below or above the market value.
The last value which is determined by the property appraisal process is the investment value. The term investment value when used in business context has been known to refer to the value to one particular investor. The investment value is always above the market value. There are other values which are determined during the appraisal process and which are the insurable and the liquidation value. Insurance and liquidity values are not very much significant as the market, value in use and investment values.
The process of determining the value of properties is carried out through various methods some of which include sales comparison approach, the cost approach and lastly the income approach. The sales comparison approach is carried out by comparing a properties characteristics with those of similar properties that have been sold in the near past. The cost approach method takes into consideration what price a buyer is willing to offer and it should not be above the current market prices..