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Compare and contrast the alternative forms of appraisal techniques commonly used in the context of commercial developments

Introduction:

Appraisal in the context of Commercial developments is bringing on the opinion of the market valuation of the property / real commercial development. It is usually called as Market Value of the Property and is considered to be very vital in terms that it brings along the true value of the development (Isaac, 2002). The true need of it is only brought about by the demand of the class of investors and their huge infrastructure built up on the humongous commercial developments. The reason being that the two real estates are never the same and they differ with regards to the location, the identity, the investment etc. which are the most important and detrimental factors of the property. (Brown, 1999)

And, above all when there is no system in the market for the pricing mechanism, there appears a valuation procedure that determines the value of the commercial development. (Isaac, 2002)

  • Appraisal's and the appraisal report's intended usage
  • Value definition
  • Assumptions or hypothetical proofs
  • Analysis of an appraisal system
  • The intended users and the consumers (Mackmin & Baum, 1995)

This actually minimised the scope of the users and then identified the end user's needs and their requirements in determining the value of the commercial development as a whole. Since the most important factor is the scope of the development's valuation; therefore it is never to take into least of the consideration at any cost.

Advantages & Disadvantages:

There is a term of art in the key process of appraisal that is termed as Highest and the Best Use; it is basically the procedure that determines the use and the disuse of the property and valuates it in actual terms. It normally deals in the commercial properties like lands and huge residential projects. Firstly, the determination is made with regards to the uses of the project and then secondly it deals with the legally impermissibility of the projects i.e. commercial developments. The outcome of this terminology is of the best use for the commercial developments and as a result we can come to know that the development is a vacant land or else. It is also sometimes referred to as economically supported model as it outlines those processes which are financially feasible. The end result therefore is the highest and the best use of the site. (Mackmin & Baum, 1995)

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