Definition: An appraisal is a statement of property value and should be made by an appropriately qualified person having authority for the transaction. The statement should be based on facts and data reported by the appropriate sources and verified by the seller. It is preferable to use information from sources other than agency reports unless the seller has specifically requested otherwise. The value of an item should be supported by a written description of it, including its age, condition, size, weight, and visual damage (if any).
An appraisal aims to give interested buyers a realistic picture of what the property is worth based on its current market value, conditions, and size. An appraisal is different from a valuation, which discusses the amount of money you are paying for a particular asset; an appraisal looks at factors that affect the value, such as the age of a particular piece of property, how well the building is maintained, etc.
The professional appraisal teams of appraisal companies provide valuable information to help potential home buyers and home sellers make informed decisions. Appraisal information is often used by government agencies such as the IRS, CDC, and WMATA when making an appraisal determination for tax purposes. Appraisal firms can also assist owners of condominium properties, mobile home park owners, and owners of other property types where accuracy and completeness are important.
When donating goods or services to a nonprofit or other organization, the value of the donated goods or services should be considered. This means that the appraisal of the property should be included in the review process. Appraisals can help determine whether a valuable asset, such as real estate can be sold at a higher price and reduce the amount of taxes owed on the property or reduced the amount of money owed on a loan or mortgage balance. Appraisals can also be performed to determine whether insurance proceeds from an accident. If so, policyholders are likely to pay less for their property than they would have if the appraisal had not been done.
Types of Appraisals
1. Home Appraisal
A home appraisal can provide useful information about a property that a potential buyer may use to make an informed buying decision. The value of a home can affect an individual’s monthly mortgage payment and how quickly money can be borrowed. The value of a home can also affect how quickly a lender will approve a new mortgage. With average home values steadily rising throughout the country, this is an important aspect to consider when selling or refinancing your mortgage.
Home appraisals are performed by qualified professionals using established and approved criteria. Home values can vary greatly from one area to another, even within the same county. Therefore, it is important to have an experienced and reputable appraisal done. This is not just for your home but for all of your real estate assets. An appraisal done properly can help strengthen your case in buying or selling your home, ultimately leading to higher cash flow and less stress.
2. Collectibles or Antiques
A professional appraisal is an important step in selling a collectible, antiques or piece of property. The appraisal gives potential bidders an idea of what a work of art may be worth based on its condition. It’s also an important step in pricing an item. Before you make an offer on an item, call an appraisal company to get an idea of what other people have paid for the same type of item and how much it might sell for. Local valuations are always best, as they give the seller a chance to see what the actual market value is. Certified appraisers give their opinions on the condition of each item (if it’s been well cared for), its age, its authenticity, and other factors. Most appraisers charge a flat rate for their services.
3. Appraisals and Insurance
When you insure something, you need to know what it is worth. This is called appraisal. An appraisal is required by law in most states and by all homeowners insurance companies. Before purchasing insurance, ask to see a written appraisal of the goods or services you plan to insure. The insurance company will use this information to assess the value of your policy and determine the cost it will need to replace or repair damaged or defective coverage if your policy is ever lost or damaged.
An appraisal is used as a means to determine the value of a policy in dispute. It is a technique used by insurance companies to ensure the highest possible level of valuation of their policies and property. The purpose of an appraisal is to determine if the property is worth the sum insured or if there has been a diminishment in value since the signing of the policy. Thus, an appraisal serves as a method by which insurance companies can negotiate higher premiums with policyholders if they believe that the property has appreciated since the signing of the contract and the premium charged would be more than adequate to recover loss due to damage or destruction and loss of revenue due to acts of nature.