- Buyer and seller are typically motivated;
- Both parties are well informed or well advised, and acting in what they consider their own best interests;
- A reasonable time is allowed for exposure in the open market;
- Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto
- The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
The Cost Approach estimates the value of the site and the cost to replicate the existing improvements using current cost estimates and deducting accrued depreciation. This approach is generally most relevant for new or proposed construction to determine feasibility. It can also be used to value specialty properties, such as churches, where the income approach may be less reliable of an indicator.
The Sales Comparison approach compares the property against recent sales of similar buildings to estimate the current value of the subject. This approach is relevant in almost all assignments and is the most common approach.
The Income Approach analyzes the current income and expenses from existing tenants and applies a rate of return (capitalization rate) on the net cash flows to determine the value of the property to an investor. For an income-producing property, this approach is particularly relevant as it is often viewed as a more reliable indicator for an investor.
- Detailed Appraisal report that includes all information required to understand everything about the property being appraised.
- Summarized Appraisal report that includes enough information to understand the conclusions provided within the report.
- Restricted Appraisal (brief) report that cannot be fully understood without a thorough knowledge of the property being appraised.
The summarized report is the most common report type for a typical transaction involving a property with a value less than $10.0M or for estate purposes where the report needs to be IRS compliant and/or meet the typical lender requirements for a real estate loan.
A restricted appraisal report is most useful for lenders or property owners that need an update of a previous report or are seeking a valuation for internal purposes/decision-making where both parties are very familiar with the property.
Knowing the value of the real estate included within the overall estate is an important part of the process. While an estimate may be fine for the purposes of establishing the estate, an appraisal is typically required during probate, in order to comply with IRS requirements. We are experienced with this process and have an IRS-compliant format for reporting this information.