Question

What is the primary role of the real estate appraisal? What are the currently accepted four methodologies for appraising real estate? 

What role does market value and agreed contract price play in the process? (CLOS5)

Answer 1

Answer :- At the time of buying or selling or insuring house, plot of land, commercial asset etc., We need to assess market value of such property. Real estate appraisal plays a vital role in determination / estimation of the market value of property (being, land or building residential or any commercial property etc.)

Four methods for real estate appraisal :-

1). Comparative method.

2). Profit method.

3). Investment method.

4). Cost method.

Some times agreed contract price may differ from the market value of property. Some times, buyer feels market value too high to bear or seller feels that there is urgent money need to him, accordingly, property can be sold at lesser than market value depending on various circumstances. Accordingly, agreed contract price (final transaction value) and market value are the two most important aspects to be considered in real estate appraisal.