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Real estate appraisal, property valuation

Real estate appraisal or property valuation is the estimation of  the highest value of  the property based on the most appropriate use of  the property by a licensed or certified real estate appraiser. 

The best use of  the property should be physically and economically feasible, legal and appropriate. The valuation of  a property differs from the property price, which may be higher or lower. The property price is the actual amount paid for the property at a particular point in time and may be affected by other factors.

If a buyer needs money urgently, the property may be sold at a price much lower than its valuation. For well maintained and furnished houses, the sale price may be higher than the valuation. A higher price may be mentioned in the sale deed , if  the buyer wants to get a higher amount as a loan. Most lending institutions like banks will sanction a loan only as a percentage of  the price mentioned in the sale deed.

Most licensed real estate appraisers or property valuers are associated with financial institutions that give loans to property buyers. Though their fees are usually paid by the home loan finance company after the loan is sanctioned,  the person receiving the loan pays the amount indirectly as loan processing fees.  Real estate appraisers physically inspect the property, check the location, quality of  construction  and other factors. They may also take a photograph of  the property, which is submitted along with their report to the lending institution. Based on the report, the lender decides whether the loan will be sanctioned.