Appraisal - Term Overview

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The concept of appraisal, also known as a valuation report, is the document signed by a competent professional whose objective is to justifiably establish the value of an asset according to previously established criteria and developing an appropriate methodology.

In the field of finance, the definition of appraisal refers to the process from which the value of an asset is estimated, such as brands, stocks, etc; or, failing that, a liability, such as the company's debt.

How is the appraised value calculated?

The concept of appraisal is closely linked to the real estate sector. The person in charge of carrying it out will be an accredited person, who is usually an architect or engineer, and for this they will be based on the comparison method, which is regulated by regulations and which requires comparison with six offers or sales of similar properties.

But this will not be the only criterion for the real estate appraisal, since there are also other factors to make its calculation:

  • Surface: the size of the house, in addition to the number of rooms and bathrooms, and the distribution. The cadastral value of the property will also be taken into account.
  • Similar sales: will take into account the sales that have occurred in the same area in recent times.
  • Antiquity: a recently built apartment will have a higher value on the market than an older one, except if it's a building with architectural or cataloged value.
  • State of conservation: check the state of the house, if it needs renovations inside or if it has been recently remodeled.
  • Building: assess whether it has elevators, common areas, etc.
  • Environment: the proximity to garden areas, schools, large surfaces, etc. also influences the real estate appraisal.
  • Public transport: proximity to means of public transport.

Once the appraisal is carried out, it will be valid from the date of issue for half a year.

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