AppraisalFinancial Dictionary -> Mortgages -> Appraisal
The real estate appraisal is done to place a market value on land or a home; this is done by a licensed appraiser and will depend on the local property market what the value is, even though no two properties are alike.
There are different types of appraisals that can be done; there is a fair market value, a foreclosure value, a distressed sale value and investment. When an appraisal is done one of the ways that the fair market value is calculated is by data collected on recent sales of properties in the area that are comparable to the property being appraised. These sold properties while comparable are not identical and the price will be adjusted up or down depending on the current property being appraised.
The appraisal of a property is normally done prior to putting the property up for sale in the current market, so that there is an accurate basis for the calculation.
The real estate person that does the appraisal is certified and has the market analysis of the current properties. This is what they use in arriving at an appraisal amount for a given property in an area, whether it is undeveloped land, land with a single structure, land with a business building, or land with a multi living dwelling.