In California, real estate appraisals are conducted by licensed professionals and used to determine the fair market value of a real property. Real estate appraisals are conducted using standardized methodology that can produce different valuations for the same property depending on the purpose of the appraisal and factors the appraiser considered in the appraisal. Ultimately, they are an opinion.
There are three basic methods or approaches for conducting a real property appraisal: the Sales Comparison approach, the Cost approach, and the Income Capitalization approach. The method used by the appraiser depends on the purpose of the appraisal and can be dictated by whomever requested the appraisal.
The Sales Comparison is most commonly used to appraise single-family residences because the approach looks at the market value of a property and price of comparable properties nearby that have recently sold. There are generally many comparisons that the appraiser can use in this approach.
The Income Capitalization approach is more often used to assess commercial properties because the approach looks at the ability of the property to generate income.
The Cost approach looks at the value of a completed property versus the cost to develop a comparable property. This approach is more commonly used when assessing property damage insurance.
Real estate appraisals are a valuable tool for a wide range of real estate matters. In a purchase or sale of real property, the buyer or seller may need to use it to determine the purchase and sale price. In an eminent domain proceeding, a property owner may obtain real estate appraisals to help determine the amount of fair compensation the property owner is entitled to. At probate or for estate planning, a property owner may need an appraisal to determine the amount of tax owed. Finally, when obtaining a loan that is to be secured by real property, an appraisal is almost always required.
Schorr Law has experience with resolving disputes involving residential and commercial real property transactions. We even have experience dealing with disputes over appraisals, the value of property and the methodology used in appraisals. To see if you qualify for a free 30-minute consultation regarding your matter, please contact us by phone, email, or send us a message through our contact form.
See related: Partition by Appraisal