Appraisals & Valuations

Appraisals & Valuations

Valuation of real property is an important and often complex process involving the services of professional appraisers.

Certified appraisals, performed by a licensed real estate appraiser, are often required by lenders before approving a loan secured by a property.  Basically, the lender wants to ensure that, if the borrower defaults on his/her loan, that there is enough collateral to cover the remaining loan amount.

In general, there are three approaches to valuing a real property:

  1. Sales Comparison Approach:  Comparing the subject property to other similar properties that recently sold (comps).
  2. Cost Approach:  The cost to build a property similar to the subject property.
  3. Income Approach:  Placing a value on the future income streams of commercial or investment properties.

How to Become a Real Estate Appraiser: Step-by-Step Guide