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 was developed so as to allow the value of residential areas, commercial buildings and apartment to be easily determined when it comes to selling of the property. This process has been carried out mainly one wants to dispose of old property. The appraisal process is mainly carried out too determine how much a given property has depreciated since it was constructed. 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. Value as a term can be divided into three major categories which include the market value, value-In-use and investment value. The market value is carried out in order to determine the price at which assets would trade in the competitive market environment. The term market value has also been used to refer to the estimated amount which an asset or a liability should be exchange on the valuation at a given date. The valuation at a given date is dependent on what price the buyer is willing to buy and at what price is the seller ready to sell the property.
The second value which is determined by the appraisal process or use value. The use value has also been described by another term which I the net book value. The use value ca be described as the benefit in term of money that an owner gains I the process of utilizing a given property. The use value is not predictable as it has at times been recorded to be above the market and at times to be below the market value.
The last value which is determined by the property appraisal process is the investment value. Investment value has been used to refer to the value of a given investor. Unlike the value at use, the investment value I constant as it 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 determination of a asset value through the sales comparison approach involves determining the value of a given property by comparing it to similar properties which have been sold in the near future. 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..