The real estate appraisal is a process that implies the physical inspection of an appraiser - duly certified professional - to a property, with the purpose of estimating its financial value.
From the real estate point of view, the evaluation of a property is a process usually required whenever the transaction of an apartment, house, shop or land is involved, for the purposes of sale, lease or within the scope of a mortgage loan.
The real estate appraisal is required for several purposes, being mandatory in some situations:
The evaluation of a real estate property can be done by several methods, among which there are the following 3:
Comparative Method - Also known as "Direct Method", "Comparison", "Synthetic" or "Empirical", it is based on knowledge of the local real estate market and the values of real estate transactions similar to those of the property being valued. This is one of the most used methods and one that inspires greater confidence, as it reflects the commercial value of the good, when subject to the law of demand and supply.
Income Method - Also known as "Analytical Method", "Income Capitalization Method", "Exploration Method" or "Indirect Method", and is used when it is possible to estimate the yield that can be obtained for a given property, having based on the current capitalization of expected net income. Together with the previous one, this is one of the most used methods in Portugal.
Cost Method - Also known as “Investment Method”, “Reproduction Cost Method”, “Replacement Cost Method” or “Replacement Cost Method”, consists of determining the value of the property through the sum of the value of the land market and all the necessary costs for the construction of a property with the same physical and functional characteristics. It is used in the valuation of rarely traded properties, such as public heritage, churches, castles, etc.
Real estate appraisals must be carried out by professionals - appraiser or real estate expert - with a degree in: Real Estate Management, Engineering or Architecture, or in a relevant area related to Real Estate Appraisal; experience in Real Estate Appraisals; active registration with the CMVM. They must be enrolled in the professional association and have insurance.
The report must contain reference to the following aspects: