Explanations

• Appraiser’s Goal: The primary purpose of an appraisal is generally to define the true average property value or market value. Market value is the price a willing buyer and seller would agree to under normal market conditions, where both act prudently and knowledgeably without undue pressure.

• Assessed Value: This is the valuation of property for taxation purposes, determined by a county assessor. Assessed value is not necessarily the same as market value. While it might be one piece of public record, it is not the main determinant for an appraiser establishing market value. Appraisers will take into account factors like the percentage of owner and non-owner occupants, vacant properties, conformity of nearby properties, and topography, but the assessed value itself is distinct from the market value they aim to determine.

• Value of the Land: The land is legally defined as real estate minus building improvements and natural resources like water or minerals. Land value is a crucial component of an appraisal. Appraisers will value land separately from the building itself, and this value is often a significant component of a real estate property’s overall value.

• Comparisons of Other Properties (Sales Comparison Approach): This is one of the three main appraisal methods and is considered the most popular and reliable for residential properties. Appraisers compare the subject property to nearby similar properties that have recently sold (comparables or “comps”). Price adjustments are made for differences in size, amenities, and location.

• Highest and Best Use: This is a fundamental principle in appraisal, referring to the legal and physically possible use of a property that is most likely to generate the greatest return over the long term. Appraisers identify this to determine the highest value estimate for a property. This analysis considers the land as though vacant and the property as improved.

Therefore, an appraiser focuses on market-driven data, property characteristics, and potential utility, making assessed value a lesser consideration compared to other factors that directly inform market value.

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