Property valuation, real estate valuation, or real property valuation is a procedure of determining the value of an asset based on market data, historical data, and personal observations. Real estate purchases frequently require appraisal as they take place infrequently and each property is different, unlike stock investments, that are traded daily. Appraisal is a process that is used by many individuals for their own personal investment decisions. A valuation can be completed for a property in several ways.
The market value of a property is determined through a series of market conditions and comparisons among similar properties. The most commonly used method of valuing a property is to use the current selling prices in the area in which the property is located and to use the mortgage rate to determine the value of a home. In the case of sales that are not made on time, the current market value may be much less than the actual amount owed on the mortgage. A qualified appraiser will be able to use a variety of methods to determine the value of a property based on these factors.
Historical information is another part of the valuation process. A home that was constructed decades ago may have been built at a time when construction costs were less and houses were built to withstand climate conditions. In these cases the value of a home may be based upon the amount of money the owner had to spend on materials, the cost of labor, and the value of the home itself during the first five years it was on the market.
The value of a property also depends on the condition of the home. Most real estate appraisers conduct a physical inspection of the property before they determine the value. Inspections are performed on a monthly basis and may be conducted for free. If an inspector finds that a property has structural problems or other repairs that require additional work, it will be reported to the lender, who will request additional information in order to determine the value of the home. An experienced real estate appraiser will be able to perform repairs and renovations to a property without costing more money.
Other factors that are used to determine the value of a home include the age of the home, the size of the home, the location of the home, the number of bedrooms and bathrooms, the amount of landscaped gardens and pools, the number of vehicles, and other amenities, and appliances that are installed, and the cost of maintaining the home, and maintenance costs of a home. A person looking for a way to purchase a new home should consider these factors before making the final decision. Real estate appraisal is a necessity when buying a home or a second home. The value of a home is determined through several sources and is based on historical data and a qualified appraiser will make the best decision.
A home that is older can cost more to insure than one that is brand new, and real estate value will be affected by age. New construction homes are more expensive to insure than older homes. However, an old home will pay off over time as it ages and can be worth much more to replace.