Real Estate Industry is very dynamic. There are numerous factors effect the value of a real estate. Some of the factors are local and some of them with wide range of impacts. An appraiser is some one trained to use the data available and to come up with an opinion of value based on the data.
In a nutshell, Real estate appraisal is the process of developing an opinion of value. Sounds simple? In reality its not. Its a complex process that would lead to an opinion of value.
There is always a confusion about value and price. Its important to understand that appraiser determines that value not the price. The differences is what the property is really worth is the market value and what it cost to buy it is the price. Lets say a property would sell for 500,000 in an open market and some one coming in and paying 520,000 for the same because they are working in the area school, In this case, a property value is 500k and price is 520. At the end, if multiple homes sells for 520k with same characteristics, then the market value itself will be 520k.
This may work other way around where the trend is downward too.
In most of the cases, property’s appraisal value is influenced by recent sales of similar properties and by current market trends