A real estate appraisal is nothing but the assessment of the rights of ownership of a property. The appraiser is required to define the rights, he or she intends to apprise. The value is not created by the appraiser; the appraiser actually tries to interpret the market to arrive at the estimated value. As the appraiser gatherers relevant data to a report, some consideration must be given to the amenities and to the site, as well as for the physical conditions of the property. However an appraiser might spend only a small period of time for inspecting the properties, but this is only the beginning. A considerable amount of research, as well as collection of general and specific data has to be accomplished, previous to the appraiser’s arrival which is the final opinion of the value. Since there are various types of values, such as the fair market value, tax value, insurance value and the value in use, which is the need to correctly define the purpose of the appraisal. An appraisal helps in numerous ways; it lowers you tax burden and helps you make one of the largest financial decisions in your life.

An appraisal is an act or process of estimating value or giving an opinion of that value. This opinion or the estimated value is obtained by means of three common approaches which are all obtained from the market. The cost approach is to find out the value that needs to be estimated, what it would cost to reproduce or replace the improvements as of the date of the appraisal, the functional obsolescence, less the physical deterioration and the economic obsolescence. The remainder or the remaining value is added to the land’s value. The comparison approach to find out the value makes use of other ‘benchmark’ properties of similar quality, size and location which have been sold recently. Actually a comparison is made to the subject property.

The income approach to determining value is of most important in ascertaining the value of income producing properties and has lesser weight in properties in residential places. This kind of approach gives an objective estimate of what a practical real estate investor will pay which is totally based upon the total income of the property which it produces. Therefore after careful and detailed study of all general and specific data which is gathered from the market; a final opinion or estimated value is correlated.