Appraisal Vs. Estimate: What's The Difference?
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By Kenny Lindsay
The appraisal industry is a profession developed to answer a clients needs and desires to own property, whether real or personal, and give this property value to him and to others. The professional appraiser is called upon to develop opinions of value of property for a number of differing reasons. Such as for new loans, refinancing existing loans, determining equitable value, insurable values, or may be required for establishing the value of an estate or individual property included in an estate, for taxation or inheritance purposes.
The appraisal profession is an industry in which there are no absolutes, and the constants are continually changing. An appraiser can take a particular item and appraise that item for a particular value on a certain date for a specific purpose, and then appraise the same item for a different value on the same date for a differing purpose. No constants, in as much as time, location and usage are items that continually change or adjust over time. The professional appraiser can develop constants such as depreciation or a replacement cost new (RCN), that can be used for multiple appraisal problems on a host of similar properties. But, given time and location these constants have to be upgraded or changed to allow for changes in the marketplace and useful life of the item appraised.
The professional appraiser appraises property, or gives an opinion of value. A professional appraiser NEVER estimates. If we consider the "2nd College Edition of the American Heritage Dictionary" - To Appraise: Is to evaluate, especially in an official capacity; an opinion: is an evaluation or judgment based on a special knowledge and given by an expert. But an estimate: is a tentative evaluation or rough calculation. To this end, an estimation can be given by anyone, whether or not that person carries special knowledge or is acting in an official capacity.
The professional appraiser provides an opinion based on special knowledge and acts in an official capacity as having fiduciary responsibilities and ethics he much be accountable for.
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