Property Valuation
A professional opinion of a property's market value, performed by a licensed or certified appraiser.
An appraisal is an unbiased estimate of a property's fair market value. Lenders require appraisals before issuing mortgage loans to ensure the property is worth at least the loan amount. The three standard approaches to value are the sales comparison approach (comparing to recent comparable sales), the cost approach (calculating replacement cost minus depreciation plus land value), and the income approach (capitalizing the property's net operating income). In New York, appraisers must be licensed or certified by the Department of State.
Exam Tip
Sales comparison = residential. Income approach = investment property. Cost approach = unique properties with few comparables. Know all three and when to use each.
Study Guide
Property Valuation
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NY Real Estate Property Valuation
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