1.2.3 Purposes Of Real Property Valuation
2.2.3 Purposes of Real Property Valuation
There are five elements of property value: Production: productivity is the way of enhancing or hindering capacity for valuation Utility: Utility is the ability to arouse desire for its possession or use. Scarcity: The object must be relatively scarce to satisfy the demand. Demand: There must be a need and ability to purchase. Transferability: It must be possible to transfer good title with ease (Donald A. Corb, JD and Richard A. Giovangelo, 2013-14).
Many reasons underpin the purposes behind real property valuations. First, most valuations are done to secure or make borrowing decision fall through. The true value of a property helps the lender to arrive at reasonable judgment on the term of contract with the borrower. Another reason for valuing a property is to make a comparison with the market price. This helps to decide whether a property is under or overpriced. Undervaluation occurs when the same property is judged to be less than it would be before an independent appraiser. The question that is seldom put forth is to what extent does valuation represents or a good proxy for open market price. The open market price reflects all available …show more content…
In the valuation process the problem is identified, the work necessary to solve the problem is planned and relevant data is collected, verified and analyzed to form an opinion of value. The valuation process is accomplished by following specific steps, the number of which depends on the nature of the valuation assignment and the data available to complete it. In all cases, the valuation process provides the model to be followed in performing market research and data analysis, in applying valuation techniques and in integrating the results of these analytic activities into an opinion of value (W. Madison St,
There are five elements of property value: Production: productivity is the way of enhancing or hindering capacity for valuation Utility: Utility is the ability to arouse desire for its possession or use. Scarcity: The object must be relatively scarce to satisfy the demand. Demand: There must be a need and ability to purchase. Transferability: It must be possible to transfer good title with ease (Donald A. Corb, JD and Richard A. Giovangelo, 2013-14).
Many reasons underpin the purposes behind real property valuations. First, most valuations are done to secure or make borrowing decision fall through. The true value of a property helps the lender to arrive at reasonable judgment on the term of contract with the borrower. Another reason for valuing a property is to make a comparison with the market price. This helps to decide whether a property is under or overpriced. Undervaluation occurs when the same property is judged to be less than it would be before an independent appraiser. The question that is seldom put forth is to what extent does valuation represents or a good proxy for open market price. The open market price reflects all available …show more content…
In the valuation process the problem is identified, the work necessary to solve the problem is planned and relevant data is collected, verified and analyzed to form an opinion of value. The valuation process is accomplished by following specific steps, the number of which depends on the nature of the valuation assignment and the data available to complete it. In all cases, the valuation process provides the model to be followed in performing market research and data analysis, in applying valuation techniques and in integrating the results of these analytic activities into an opinion of value (W. Madison St,