Real estate appraisal is the act of
presenting an opinion of the value of a property. There are two main
types of appraisal:
Fee Appraisal -
Appraisal of an individual property by a contracted appraiser who is
usually paid a fee. For example, this will be done prior to a loan being
issued by a bank, to verify that there is sufficient collateral should the
Mass appraisal - Appraisal of many properties using a more statistical
approach. Usually done by government agencies responsible for setting
values for property tax calculations.
There are various approaches to determining the value, including:
Market - also known as "sales comparison" - establishing the value based
on a comparison of what similar properties have sold for.
Cost - Establishing value based on the cost to build that structure new,
Income - For commercial properties as well as multifamily residential
property (duplexes and apartment buildings), establishing the value based
on the income the property generates. For example, Retail space may be
valued based on the rental income.