Real Estate Appraisal - Market Value -
Value In Use - Investment Value - Insurable Value - Liquidation Value -
Comparable Market Sales - Comps - Comparative Market Analysis - CMA
Real Estate Appraisal Valuation
• An opinion of the
estimated value of land and property formed by a licensed appraiser.
appraisal value is based on a comparison on similar properties sold
• Based on the highest and best use of real property.
appraisal value is based on a likely sales price in an open and competitive
• The need to sell rapidly is not taken into account.
special circumstances are not taken into account.
• Lenders may use either
the appraised value or sale price, whichever is lower to determine the amount of
the mortgage to be offered.
• This is not a home inspection and does not
determine true value.
The price at which an
asset would trade in a competitive Walrasian auction setting. Market Value is
usually interchangeable with Open Market Value or Fair Value. International
Valuation Standards (IVS) define Market Value as: the estimated amount for which a property
should exchange on the date of valuation between a willing buyer and a willing
seller in an arms-length transaction after proper marketing wherein the parties
had each acted knowledgably, prudently, and without compulsion.
The net present value
(NPV) of a cash flow that an asset generates for a specific owner under a
specific use. Value-in-use is the value to one particular user, and is usually
below the market value of a property.
is the value to one
particular investor, and is usually higher than the market value of a property.
The value of real
property covered by an insurance policy. Generally it does not include the site
This may be analyzed as either a forced
liquidation or an orderly liquidation and is a commonly sought standard of value
in bankruptcy proceedings. It assumes a seller who is compelled to sell after an
exposure period which is less than the market-normal timeframe.
Comparable Market Sales (Comps)
When you sell your home,
an Appraiser will use comps (comparable market sales)
of local properties sold within the last six months or so to value your home.
With today’s declining seller’s market, six-month-old information may be
old history. Appraised value does not always equal the true market value,
or what the home will sell for on the open market.
Comparative Market Analysis
Realtor will give you a comparative market analysis - CMA
- an informal estimate of market value based on comparable sales from
the last few months.
will use the appraised value to determine a new mortgage amount. Some
lenders require that in case of foreclosure, the stated property value is ample
enough to cover the mortgage amount plus their selling costs. Consequently, a
sale may possibly fail if a home sells on the open market for more than the
appraised value, which often happens in bidding wars over a desirable piece
And After Purchasing Your Home, File a Homestead
giving you the
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