An appraisal classifies someone or something with respect to its worth. While anyone can give an estimate of how much they think things may be worth, oftentimes trained professionals are used to determine a thing’s worth with respect to the market. Professional appraisals are very important when purchasing high value items such as artwork and jewelry. Appraisals are also absolutely necessary when selling or buying real property, as well as during negotiations for business mergers and acquisitions.
The different kinds of appraisal include:
Personal property appraisal. Used to assign value to things like personal effects, antiques, furniture, automobiles, electronics, etc.
Real property appraisal. Used to determine the present value of real estate, including the buildings standing on the land.
Mass appraisal. This is when a professional appraises the entire property of an individual (personal plus real).
Business valuation. Used to determine the value of a business taking into account all the tangible and intangible assets and liabilities. This entails making an inventory of the business supplies, equipment, etc. and looking at the business’ financial records. Aside from this the brand and reputation of the business is also factored in, making for a really complex process.
Factoring in intangibles does not apply solely to business valuations but can apply to personal and real property as well. For example, a discarded cigar wouldn’t be worth anything but Winston Churchill’s cigar, simply by virtue of having been used by him, was appraised at several thousand dollars.