What Is The Difference Between Market Value And Market Price

Category: Finance, Real Estate.

A Real Estate investment Appraiser performs a service called as real estate appraisal.

The highest and best use is that use which produces highest and possible return on real estate property. An appraiser gets the opinion of value based upon the highest and best use of real estate investment property. This use must be profitable and probable. Typically, the real estate appraiser value is reported on a standardized form, the Uniform Residential Appraisal Report. Also of importance is the definition of the type of value being developed and this must be included in the appraiser, i. e. fair market value, quick sale value, condemnation value, etc. What is the difference between market value and market price?

It is the task of the real estate appraiser/ property value to judge whether a certain price obtained under a certain transaction is indicative of market value. A price obtained for a specific property under a specific transaction may or may not represent that property s market value: special considerations may have been present, such as a family relationship between the real estate buyer and seller, or else the transaction may have been part of a larger set of transactions in which the parties had engaged. There are three dynamic approaches to determine the fair market value of a property. Sales comparison approach. Cost approach. Income approach. Costs, and sales vary, income widely from area to area and particular importance is given to the specific location of the property.

The real estate appraiser will determine which of the approaches is applicable and develop an appraisal based upon information from each individual s investment area. In the US, the appraiser licensing of individuals is left to the states. The individual states have the rights to decide if licensing is required for other types of appraiser. However all appraiser for a" Federally Related Transaction" must be performed by an appraiser with the appropriate type of license, and conform to USPAP. A real estate investment appraiser will provide their personal opinion of value, based on their estimate of the market s reaction, but other appraisers will have varying opinions and sometimes the market reacts in unexpected ways. An appraiser is no more accurate than other predictions of human behavior.

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