Property valuation, real estate valuation, the process of formulating an assessment of value for a particular real estate. The real estate market is highly dynamic, so even a minor change in valuation can have a substantial effect on the value of a home. Real estate sales often involve real appraisals as they occur infrequently, and each home is uniquely different, unlike corporate stock, which are easily replicated and are virtually identical. A buyer’s perception of value for a property greatly affects the price a property will sell for, so it’s important to be aware of what constitutes an accurate assessment.
A typical real estate valuation consists of a few elements including: a listing of comparable homes, home price and location. While these components may seem quite general, they are the key elements used to form the basis for a successful and fair value estimate. In addition to standard methods of assessing real estate values, such as sales tax assessments, land surveys, or market data, home buyers and sellers may also need to consult with a certified appraiser to ensure that the value they are given is accurate and in accordance with the law.
There are two main methods of valuing homes, the first is known as the traditional method. This involves performing a thorough market research, gathering all of the information related to a home and the homes nearby, and using it to create a complete picture of the home’s current condition. Once the information is gathered, a representative from the seller’s real estate agency will make a presentation to the seller. If the seller accepts the home’s offered price, the buyer agrees to purchase the home, and a transaction closes.
The second traditional method is called the “risk-based” method. The risk-based method requires the seller to submit a detailed questionnaire to the seller’s agent. Based on this information, the real estate agent will form a list of possible home values based on factors that relate directly to the seller’s home. If the home has any special features, such as a large or expensive lot, or a historic designation, the list will be more comprehensive and will be more reliable.
A third method of real estate valuation, the GIS method, uses information such as street level elevation and street grid patterns to determine the value of a property. As part of the procedure, a real estate professional will study the home’s location and surrounding areas to determine the current condition of the home. These maps are then used to create a three dimensional model that shows exactly how the home’s landscape, structure and internal conditions change over time.
While it is true that there are many ways to evaluate a home for its current market value, many people prefer to conduct their own real estate valuation. When you are purchasing a home, it is important to remember that a good real estate agent can help ensure that you get a fair and accurate value by using the methods described above. Whether you are a seller or a buyer, a knowledgeable real estate professional can help you work through all the details of your transaction so you can make the best decision possible.