Appraisals and Your Loudoun County Home

A real estate appraisal is a service performed by an appraiser that develops an opinion of value based upon the highest and best use of real property. The highest and best use is that use which produces the highest possible value for the property.

Types of value

There are several types and definitions of value sought by a real estate appraisal. Some of the most common are listed:

• Market Value – Market value is usually interchangeable with fair market value or fair value. The legal definition of market value is the following: "The most probable price at which a property would trade in an arms-length transaction in a competitive and open market, in which the buyer and seller each act prudently and knowledgeably and in which the price is not affected by any special relationship between them". This method us the most widely used in a residential real estate transaction.

• Value-in-use – The net present value (NPV) of a cash flow that an asset generates for an owner under a specific use. Value-in-use is the value to one particular user, which may be above or below the fair market value of a property.

• Investment value - is the value to one particular investor, which may be above or below the fair market value of a property.

• Insurable value - is the value of real property covered by an insurance policy. Generally it does not include the site value.