When it comes to real estate appraising, there are different ways to determine the market value of the property.
1. Market Comparison: This approach is to look at the similar properties in the same neighborhood that are most recently sold, based on the sold price of that property, it applies some adjustments and determine the value of the current property. This approach is commonly used for residential properties, like condos, single family homes and so on. The thing to look at is that if the market is rapidly changing, it will effort its effectiveness. Also if the market is dead, then there may not be other similar sold properties to compare with.
2. Income approach: This approach AKA valuation approach is to look at the income that this property is producing. This approach looks at the annual net operating income and divide it by CAP rate. This is commonly used to appraise commercial real estate and business
3. Cost approach: This approach simply looks at how much does it cost to build a property, which includes construction cost, material cost, labor cost, insurance cost and so on. This approach is commonly used for appraising special purpose properties such as church, funeral homes, stadiums and so on.
Appraiser is a different profession that requires different license and training. It is more the people that love to play with numbers. It can be a fun profession, but not for me at this time.
1. Market Comparison: This approach is to look at the similar properties in the same neighborhood that are most recently sold, based on the sold price of that property, it applies some adjustments and determine the value of the current property. This approach is commonly used for residential properties, like condos, single family homes and so on. The thing to look at is that if the market is rapidly changing, it will effort its effectiveness. Also if the market is dead, then there may not be other similar sold properties to compare with.
2. Income approach: This approach AKA valuation approach is to look at the income that this property is producing. This approach looks at the annual net operating income and divide it by CAP rate. This is commonly used to appraise commercial real estate and business
3. Cost approach: This approach simply looks at how much does it cost to build a property, which includes construction cost, material cost, labor cost, insurance cost and so on. This approach is commonly used for appraising special purpose properties such as church, funeral homes, stadiums and so on.
Appraiser is a different profession that requires different license and training. It is more the people that love to play with numbers. It can be a fun profession, but not for me at this time.
