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What should I know about real estate valuation?

When dealing with a probate issue, one of the things that you will have to find out is the value of the estate. There are many things that go into this. It is important for anyone who is involved with the estate to understand these points.

When you are dealing with real estate holdings, you need to understand a few basic terms that might come up. Here are a few frequently asked questions to think about:

What components go into determining value?

There are four components that help to determine the value of real estate. The demand for the property is one since this directly impacts what the parcel would sell for. The scarcity of the property, which means how many competing properties there are, has an effect. The utility of the parcel, which means the ability to meet a future owner's expectations and needs, matters. The transferability of the property is the fourth because real estate that is easier to transfer might sell faster.

Are value, cost and price the same?

Value, cost and price aren't the same thing. The amount of money it took to build or the acquire the real estate is the cost. The value is the perceived worth of the property. The price is what is being asked of another to purchase the property. Knowing these three terms is an important part of understanding the estate's value.

You need to make sure that you take the time to go over the documentation for the valuation of real property in a probate case. This is something that can have a big impact on the fate of the estate.

Source: Investopedia, "What You Should Know About Real Estate Valuation," Jean Folger, accessed Aug. 15, 2017

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