Real estate appraisal

Real estate appraisal, property valuation or land valuation is the practice of developing an opinion of the value of real property, usually its Market Value.

The need for appraisals arises from the heterogeneous nature of property as an investment class: no two properties are identical, and all properties differ from each other in their location - which is the most important determinant of their value.

So there cannot exist a centralised Walrasian auction setting for the trading of property assets, as there exists for trade in corporate stock. The absence of a market-based pricing mechanism determines the need for an expert appraisal/valuation of real estate/property.

Although some areas require no license or certification at all, a real estate appraisal is generally performed by a licensed or certified appraiser (in many countries known as a property valuer or land valuer and in British English as a "valuation surveyor").

If the appraiser's opinion is based on Market Value, then it must also be based on the Highest and Best Use of the real property. For mortgage valuations of improved residential property in the US, the appraisal is most often reported on a standardized form, such as the Uniform Residential Appraisal Report.

Appraisals of more complex property (e.g. -- income producing, raw land) are usually reported in a narrative appraisal report.