The Many Uses of Real Estate Appraisals

Often when referring to an appraisal in typical fashion one would assume it to be for one purpose; the mandatory step in a real estate transaction in order to secure a mortgage loan. It is true that this is the most common use of a real estate appraisal, however there is much more vastness to the appraisal world apart from financing and credit attainment.

The transferring of ownership would also require appraisals. Not to be confused with a credit appraisal this type of appraisal would be used to gauge the prices of real estate. This could be used to help prospective buyers to set offering prices, help prospective sellers determine acceptable selling prices, provide a basis of real property exchanges, establish reorganization or merging ownership of multiple properties or to complete the terms of a sale price for a prospective transaction. 

Another large arena for the use of appraisals would be for litigation. This could come in several forms such as expropriation proceedings, property divisions, or environmental litigation. In expropriation proceedings it would be used to develop an impression of market value of a property before or after a taking (the act of enforcing the right to expropriate), or gauge the damages to a property created by a taking. Property division would be for a similar purpose producing a market value of a property in contract disputes or partnership interests. Environmental litigation uses would primarily involve the assessment of damages shaped by violations of environmental laws or environmental accidents.

Appraisals are also heavily relied upon in tax affairs. They are used for estimating opinions of value for assessment value used by municipalities to collect property taxes at the value at which they are assessed. If you are looking for a property tax consulting company that can help you save money on property taxes on a no win – no fee basis contact Navitax. They are also used for tax estimations to separate assets into depreciable items like buildings or other infrastructure, and non-depreciable items like land. Furthermore it would calculate the applicable depreciation rate for taxation purposes. In case of inheritance an appraisal would be used to estimate value of real estate portion in estate plans which would enact the foundation of future capital gains.

The last section we would look at is the use of appraisals in accounting, decision-making and investment direction. They are invaluable products for rent schedules and lease provisions, providing a feasible estimate for construction or renovation, as well as assist the needs for policyholders, adjusters, and insurers.  Moreover appraisals would be used in the process of aiding in corporate mergers, estimating liquidation value in forced sales or auctions, or assisting in arbitration of valuation issues. In investment direction they would prove helpful in positioning clients for their investment goals, resources, risk, constraints, and timing of certain actions. The need of analysis in all forms of real estate also clearly uses appraisals and methods for supply and demand trending, ascertaining specifics about real estate markets and valuation of assets.

All in all there are much more uses and purposes of appraisals than meets the average home purchase. Many of these appraisals have very specific intentions and the correct appraisal expert is needed in all of them.