What is Appraisal – Its Valuation Methods, Factors and More

Definition of Appraisal

The word appraisal designates that determination of the price or value that something holds. Whether it be an object, a real estate, or any other plausible material good to keep an appraisal. An estimate in the market in which it is bought and sold.

The valuation which carries and by the value of real property, an object, among others, is determined to be commercialized in the market and various factors condition that

Specific Field of Finance,

The appraisal or valuation happens to be the name which referred to the process from which the value presents an asset, such as estimated: companies, brands, stocks, others, or failing that, a liability (the debt of a company).

There are Many Valuation Methods, Among Which are:

Absolute valuation model (one that determines value through the estimation of the future flow of funds. Predicted from the asset and discounted at today’s cost),Model relative valuation (will determine the price based on the market prices of similar assets) and option valuation model (only used in certain types of derivative financial assets).

In any case, it is essential to point out that, always, an optimal appraisal will depend mainly on the financial information of the company in question.

Public Shares

In the case of companies that present a public issue of shares, the financial statements are reviewed by public accountants and then manage by a specialized entity assigned to such need.

Such a situation does not usually happen with private companies, which in many cases, their financial statements are human-made to reduce taxable income.

Meanwhile, a deficient appraisal or valuation will affect an over or undervaluation scenario.

On the other hand, in the area of buying and selling properties, the word appraisal turns out to be a common term. since in this way it is designates as  determination of the value that this or that property presents.And that will depend on various factors that we will address below in detail.

Public Auctioneer

When an owner wants to put their property up for sale or rent, they must go to a real estate agent or professional.
Who is qualified in the matter to evaluate the property and other influential conditions. And after analyzing all the variables, determine the corresponding sale or rental value to that property?

We must emphasize that such evaluation of the property, to rent or to sell. Must be carried out by a specially trained professional, known as a public auctioneer.

A Professional will Arrive at the Determination Taking into Account Several Factors Such as:

  1. The square meters of the property,
  2. Its condition,
  3. Its location,
  4. The value of the square meter within the area of the position
  5. Any other outstanding weights.

There are various methods of appraisal, the one of comparison, is the most used and consists of the valuation of the property . From the comparison with other similar goods and whose value is already known.

The knowledge of six properties that is mention is require as reference value of square meter After defining the unit value of the square meter, it has to multiply by the square meters of the property, and that gives us value.

Now, the valuation does not end there, but other factors will add or subtract in the cost must take into account, such as the in a particular area. Neighborhood some neighborhoods are more appreciated than others, and that makes the meter value.

The Number of Environments

The larger the property, the lower its value concerning the smaller features that, for example, are easier to sell.

The Age of the Property

If it is brand new, it will be more expensive than if it is several years old.

Because of course, it assumes that there is more significant wear.Especially in the case of buildings with the horizontal property.

And of Course the State of the Property

That is, if it is in perfect condition of conservation and does not need any arrangement

Or whether on the contrary if you need it and must be recycled.

Luminosity is also highly regard by most people, and it occurs on the upper floors.

Provisions

If it has amenities, pool, grill, multipurpose room. something very present in new buildings and also the provision:

If it is on the street, quiet part of the building.

lateral, it will affect the value.