NEWS - Valuation Process: Introduction to Commercial Real Estate Appraisal

NEWS - Valuation Process: Introduction to Commercial Real Estate Appraisal. The valuation process is a systematic approach to a real estate appraiser used to provide a client responds to their questions about the value of real estate. A wide variety of questions related to the value can be determined when this process has been modified by a correct and an appraiser.

The first step in the process of assessment is that an agreement is made between the client and the evaluator. The evaluator agrees to provide a valuation service in exchange for a fee. A view of the market value of a particular property is the main objective of the evaluation projects. In general, once an appraiser presents the results of the evaluation to the client, complete the service agreement. The evaluation process includes all steps necessary to perform these assessment tasks.

As in the scientific method, the valuation process follows a specific set of procedures. The number of steps depends on a number of variables. The model provides a model for the application of valuation methodologies. This allows the appraiser to combine market research and analysis through assessment techniques to form an opinion of value is well supported. The models are also the standard by which assessors judge the conclusions of some other value.

Once an appraiser is assigned a property, the investigation should be completed in order to obtain an adequate knowledge of the market in which the property resides. Trends are all the way from an international perspective to local or regional level. This market analysis allows the appraiser has an idea of ​​the dynamic relationships between the forces, factors and actors in the value of real property. Quantitative data on market trends is also extracted during the investigation.

The overall objective of any assessment project is to obtain an assumption defensible value, which reflects the important factors in the market value. The property must also be measured with the intended use in mind.

To reach a value conclusion, three main methods are used in combination. The three are:

1. The cost approach method - derived from the current cost of reproducing the existing structure as a business incentive or benefit, net loss of total cost depreciation, plus the estimated land value.

2. The method of sales approach - derived from the comparison of ownership of recent sales of comparable properties in the same market.

3. The income capitalization method - derived by converting your expected win in property value.

Each of these three methods is interconnected. To complete the process, the appraiser will draw on data collected from each methodology and develop a real property value. This value can be an estimate of the unique value or range of values.