Real estate assessment is a process of analyzing a piece of real property with the aim of determining its value, legal standing and overall condition. This is an essential step for anyone operating with estate, no matter if selling, buying or renting it. To sellers, property assessment allows assigning an adequate price for the real estate in question, which ensures that clients will not be turned away by the discrepancy between the price and the apparent value. To buyers, it helps forming an adequate opinion about a piece of real estate and prevents from being tricked into buying/renting property that is not worth the money. While sometimes the terms ‘property assessment’ and ‘property valuation’ are used interchangeably, these articles imply the following meaning - property assessment encompasses all the possible assessment procedures (including valuation), while property valuation itself only deals with establishing the monetary value of a property.
Valuation
Property valuation or real estate appraisal is a process of determining the value of a property, usually performed by a certified specialist, especially when the value is determined for tax or mortgage purposes.
The simplest case when a valuation is required, is when a person wishes to buy, sell or rent a property, and thus needs to know how much it is worth. Valuation is especially important to property investors, who cannot afford losing money because of poor pricing. There is a number of factors influencing the value of a property, chiefly the location and improvements. While the value of a location changes at a very slow pace, property improvements and physical condition are a lot more rapid. This is the reason why valuation procedures should be conducted as close to the time of transaction as possible, as only a recent report is able to indicate the true value of a piece of real estate.
It is useful to remember that the value of a property does not equal its price. A valuation procedure only determines the value, while the seller is free to establish any price he/she deems necessary. It is, of course, advisable to keep the price reasonably close to the value, as a big discrepancy between these two is likely to scare away customers, especially if the condition of the property is apparently not in line with the price. However, one should not feel that valuation is a constraint - it is exactly the opposite, a helping guide on how to price the property in the best way possible.
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