| A Real Estate investment Appraiser performs a | | | | property. |
| service called as real estate appraisal. An | | | | |
| appraiser gets the opinion of value based | | | | 1. Cost approach |
| upon the highest and best use of real estate | | | | |
| investment property. The highest and best use | | | | 2. Sales comparison approach |
| is that use which produces highest and | | | | |
| possible return on real estate property. This | | | | 3. Income approach |
| use must be profitable and probable. Also of | | | | |
| importance is the definition of the type of | | | | The real estate appraiser will determine |
| value being developed and this must be | | | | which of the approaches is applicable and |
| included in the appraiser, i.e. fair market | | | | develop an appraisal based upon information |
| value, condemnation value, quick sale value, | | | | from each individual's investment area. |
| etc. Typically, the real estate appraiser | | | | Costs, income, and sales vary widely from |
| value is reported on a standardized form, the | | | | area to area and particular importance is |
| Uniform Residential Appraisal Report. | | | | given to the specific location of the |
| | | | property. |
| What is the difference between market value | | | | |
| and market price? A price obtained for a | | | | In the US, the appraiser licensing of |
| specific property under a specific | | | | individuals is left to the states. However |
| transaction may or may not represent that | | | | all appraiser for a "Federally Related |
| property's market value: special | | | | Transaction" must be performed by an |
| considerations may have been present, such as | | | | appraiser with the appropriate type of |
| a family relationship between the real estate | | | | license, and conform to USPAP. The individual |
| buyer and seller, or else the transaction may | | | | states have the rights to decide if licensing |
| have been part of a larger set of | | | | is required for other types of appraiser. A |
| transactions in which the parties had | | | | real estate investment appraiser will provide |
| engaged. It is the task of the real estate | | | | their personal opinion of value, based on |
| appraiser/property value to judge whether a | | | | their estimate of the market's reaction, but |
| certain price obtained under a certain | | | | other appraisers will have varying opinions |
| transaction is indicative of market value. | | | | and sometimes the market reacts in unexpected |
| | | | ways. An appraiser is no more accurate than |
| There are three dynamic approaches to | | | | other predictions of human behavior. |
| determine the fair market value of a | | | | |