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Accurate property values are vital to mortgage brokers and real estate investors, who must make pivotal decisions based on the reported value of a house or land parcel. An appraisal that misses the mark and reports the value too high or too low, can have costly repercussions. Read on to learn why an accurate appraisal is so important.
Omer Reiner, Licensed Realtor, and President of FL Cash Home Buyers, LLC.
Table of Contents
Slimmer Profit Margins
Incompetent asset appraisal can be one of the worst things to happen in a real estate business. Asset appraisal depends on three things:
- Income generated
- Fair market value
If this [appraisal] is done improperly in a real estate business, two things can happen:
- Real estate businesses could purchase properties for more than they are valued.
- They can sell the properties for lower than they are valued.
Real estate businesses have a profit margin of only 14.8%, meaning that real estate businesses cannot afford mistakes in appraisal if they expect to be profitable.
It is best to hire a good inspector and asset appraiser, so real estate companies can assess the value of these properties as accurately as possible.