Market Evaluation is an assessment of property and its market value. The market price establishes the possible market value at which the object can be released on the open market in competition, when counterpart is acting reasonably and has all vital information.
The market value of the property is the most common type of market evaluation. Market value determines the value of an object or individual rights with respect to the estimated object, such as the right to lease, the right to use and so on. However, after assessing the market value, its price may be significantly adjusted, in order to determine the real value of the goods and property valuation.
The market price may be made in regards to such facilities as land, residential real estate (apartments, cottages, houses), commercial real estate (offices, hotels, retail and warehouse space), industrial estate (buildings, industrial complexes), utilities (bridges, overpasses, gas and oil pipelines, heating), unfinished constructions.
Market value helps the most advantageous to get rid of real estate, this new resource that enterprises and citizens have at their disposal. Market evaluation becomes necessary, when the owners of land and real estate want to obtain a credit. Without a proper evaluation, they should not count on any additional investments, including foreign ones.
The market value of the property is determining the most probable price that come up when an object of property is being sold at a competitive and open market if all the necessary conditions are met for a fair deal.
These conditions are: buyer and seller are based on typical, standard motifs. Neither of the parties is forced to agree; both parties have full information for decision making and act in an effort to meet their interests; deal price reflects the normal conditions and contains no discounts, concessions or specific credit either party might have associated with the transaction.
There are three basic methods of assessing the market value of real estate: the method of comparison, the cost method and the income capitalization approach. The basic method of market valuation is a method of comparison. This method can be applied when there is a land market or real estate, and the task of appraisers is to analyze the market, compare similar sales and thus obtain market value on an estimated object. The method is based on a comparison of the object is offered for sale with market counterparts. It finds its greatest application in the West (90 percent of cases).