Real estate appraisals are a lucrative business.
While there are dozens of sites and services that offer the same service, it’s easy to get lost when you’re trying to understand how to best serve clients.
In this article, I’ll show you the most effective ways to build a real estate appraisal business.
You can also use this as an exercise to find a free online appraisal guide.
What are the different types of real estate valuations?
Real estate valuation is a complex area, so it’s important to understand the difference between valuation and appraisal.
There are two main types of valuations: market value and appraisal value.
Market value valuations are based on what you think the market is worth, such as a property’s market value.
Appraisals use a different valuation method, called a weighted average of all the available data from a wide range of sources, such the owner’s past appraisal, previous listings, the location and history of a property.
The weighted average is calculated by taking the total sales price for the property, subtracting all the appraised value and dividing it by the number of available listings.
There’s a huge difference between a market value valuation and an appraisal value valuation.
Market Value Valuations A market value appraisal has a higher risk of being wrong than an appraisal.
A market valuation doesn’t take into account the market’s fundamentals, such how many homes are available, the amount of demand, or other factors.
You’re more likely to make an appraisal if you have a large number of potential buyers and are aware of the potential negative impacts of a loss.
But when a property is undervalued, the risk of a bad appraisal is far higher.
Market valuations can be wrong because they use the value of the property as the only way to judge a property, not the market.
Market values are also influenced by a number of factors, including: The amount of money that’s being paid for the land.
A property that’s been listed and sold several times can be worth far more than a property that hasn’t been listed.
There can be huge differences in value between one-and-a-half-million dollars and $10 million, or even $200,000.