Property valuation or real estate appraisal is a process of determining the value of a property, usually performed by a certified specialist, especially when the value is determined for tax or mortgage purposes. The process of valuation also gives a useful insight into the possible pricing of the property. Naturally, the price of a real estate is whatever the seller sets for it, but usually it reflects the value pretty well, as hardly anyone would buy a property, the price of which is substantially higher that its value. Conversely, hardly anyone would be willing to sell a property at a price that is drastically lower than its value - that would mean losing profit.
Parameters
The value of a property is determined by all of its parameters imaginable - anything that may affect the usage or living conditions also affects the value. One aspect that is not included, however, is the emotional/perceptual value, e.g. the fact that the property is a heirloom, or that the neighbours are likeable. Such parameters are highly subjective and will be different for every person, which is why they cannot be taken into consideration - the valuation process tries to determine the objective value of the property.
The most widely used aspects of valuation include:
general technical condition
quality of building materials
external insulation
the number of recent repairs
floor of an apartment in a multistorey complex
the quality of utilities
sewers, sanitation and general water supply
heat supply
electricity
parking and in-built storage facilities
lighting, both inside and outside, as well as general beautification of the area (in Latvia, the presence of greenery is especially valued)
sound and light pollution
the surrounding infrastructure and facilities
roads
schools
parks
shops
public transport stops
any other facilities needed for a comfortable life
Time
The time it takes to perform a property valuation mainly depends on the agency and on the difficulty of evaluating a specific real estate. The easiest for evaluation are apartments built according to a specific construction project. Then there are private houses and newer buildings, whose constructive parameters are not yet standardized or are new to Latvia. Finally, the most difficult and time-consuming to evaluate is land, especially with buildings on it. Depending on this, the process of valuation can take anywhere from 2 to 10 days.