Valuation
The process of estimating the worth of an asset. In real estate, valuation encompasses the appraiser's methods and analyses — the three approaches to value, reconciliation, and the reasoning that supports the final opinion.
Related Terms
Appraisal
The act or process of developing an opinion of value for a property, performed by a licensed or certified appraiser following recognized methods and professional standards.
Sales Comparison Approach
A valuation method that estimates a property's value by comparing it to similar properties that have recently sold in the same market area.
Cost Approach
A valuation method that estimates value by calculating the cost to reproduce or replace the improvements, subtracting accrued depreciation, and adding the land value.
Income Approach
A valuation method that estimates a property's value based on the income it generates or is expected to generate.
Reconciliation
The process by which an appraiser evaluates and weighs the results from the different valuation approaches (sales comparison, cost, and income) to arrive at a final opinion of value..
More in Appraisal Process
View allScope of Work
The type and extent of research and analysis performed in an appraisal assignment.
Effective Date (Date of Value)
The date on which the appraiser's opinion of value applies.
Extraordinary Assumption
An assumption that is directly related to a specific assignment and, if found to be false, could alter the appraiser's opinions or conclusions.
Hypothetical Condition
A condition that is contrary to known fact but is assumed for the purpose of analysis.