The Valuation Process

Although characteristics of properties differ widely, most appraisal problems can be solved through a systematic valuation process. In the valuation process:

  • The problem is defined,
  • The work necessary to solve the problem is planned,
  • The data involved are acquired, classified, analyzed, interpreted, and converted into an appropriate estimate of value.

The valuation process is employed to provide the answer to a client's question about real property value. This process leads an appraiser from fully identifying the particular problem to reporting its solution to the client.

Each real property is unique, and many different types of value can be estimated for any single property. The most typical appraisal assignment is undertaken to estimate market value, and the valuation process contains all the steps needed in that type of assignment. However, the valuation process also provides the framework within which any other defined value can be estimated. Further, conclusions in consulting assignments often necessitate the derivation of value estimates through the application of the valuation process.

The valuation process is accomplished by following specific steps, the number of which depends on the nature of the appraisal assignment and the data available to complete it. In all cases, however, the valuation process indicates the pattern to be followed in performing market research and analysis of data, in applying appraisal techniques, and in integrating the results of these analytic activities into an estimate of defined value.

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