Understanding Value in Appraisal Practice
To understand value, it is important to understand the basic economic principles that are associated with value. In economics and commerce, the term “value” usually denotes the worth of a good or service as determined by the market or the perceived benefit it provides to a consumer. It’s important to remember that economic value is not fixed but an opinion on the worth of a property at a specific time based on economic theory. This theory forms the foundation of appraisal practice, which is the objective and independent study of what causes value, how value changes, and the methods of analyzing value.
Is There More Than One Type of Value?
Yes, there are multiple types of value. Appraisers begin by clearly defining the appraisal problem, which includes determining the appropriate type and definition of value. Even within the same type, value can have various definitions and interpretations, leading to different levels of analysis and potentially different conclusions.
Common Types of Value Analyzed by Edge Realty Advisors
Understanding value requires understanding the many types and definitions of value that exist. Some common examples include:
- Market Value: Appraisers most commonly use this type of value when the client needs to “know the property’s value.” However, the definition and application of market value can vary. For example, in eminent domain cases, appraisers might not consider future nearby improvements, but in mortgage financing, they must include them. Another common definition used in estates is Fair Market Value, defined by the Department of Treasury.
- Liquidation Value: This term often applies when a seller, under pressure to sell quickly, must negotiate a rapid sale. Both the buyer and the seller aim to act in their best interests, although the seller’s priority is to sell the property swiftly.
- Insurable Value: This value reflects the cost to build a replacement or reproduce the existing structures. It is crucial in insurance settings and litigation.
- Investment Value: For investment properties with significant cash flow, investment value is based on investor-specific criteria rather than market norms. This involves detailed cash-flow analysis with inputs driven by the specific investor criteria.
- Use Value: Represents the value under continued current use without considering alternative uses that might offer higher value. This is particularly relevant in business continuity scenarios.
How Can Edge Realty Advisors Assist You?
Our team of experienced appraisers leverages advanced tools and a deep understanding of economic concepts of value to provide accurate and reliable appraisals for various purposes, including:
- Estate, will, and probate appraisals
- Mortgage financing appraisals
- Liquidation scenarios
- Bridge loan appraisals
- Investment and use-value analyses
- Insurable value appraisals and reserve studies
With over 20 years of hands-on appraisal experience, the partners of Edge Realty Advisors have been trusted providers of appraisal services across Florida, ensuring quality and precision in every assignment. A partner from our firm will personally oversee the market valuation process to meet your specific needs.
Where Does Edge Realty Advisors Operate?
While we have extensive experience throughout most of Florida, our services are not limited to any single region. For complex appraisal challenges, Edge Realty Advisors offers nationwide consulting, appraisals, and review services, including:
- Appraisal standards consulting
- Portfolio management appraisal reviews
- Mortgage-backed securities appraisal reviews
- Appraisal litigation support
At Edge Realty Advisors, we are committed to delivering high-quality appraisal services that meet our clients’ diverse needs. Whether you are dealing with a straightforward estate appraisal or a complex investment scenario, our experts are here to provide the clarity and precision you require.