INTRODUCTION
Property valuation may be considered the heart of all real estate activity. Only a practical understanding of real
estate values will enable real estate brokers and salespersons to carry out their functions in a useful and
dependable manner in serving their clients and in meeting their obligations to the general public.
Brokers and salespersons should have a good understanding of: the theoretical concepts of value; the forces
which influence value; and the methods by which such value may be estimated most accurately.
Probably the question most frequently asked brokers by clients is, “How much do you think the property is
worth?” It is a daily occurrence for the real estate broker to have clients ask about the fair price, fair rental, fair
basis for trade, or a proper insurance coverage for property. A broker needs to know how to answer such
questions correctly.
To be successful in business, an agent must determine whether time can profitably be spent in trying to sell
property at a listing price set by the owner. The agent must keep in mind that in accepting a listing the agent is
obligated to put forth best efforts to find a buyer for the property at that price. A seller’s unrealistic asking price
is a roadblock that can be remedied by a knowledgeable salesperson capable of making a market analysis and
using the three approaches to value. Such ability assists the seller to set the most appropriate listing price.
The real estate professional is cautioned, however, not to claim greater appraisal ability or expertise than is
actually possessed. Great harm can come to the client and to the professional if significant appraisal mistakes
are made. When unable to competently perform a valuation, the advice of a professional real estate appraiser
should be sought. Licensed or certified appraisers are governed in their competency by the Competency Rule in
the Uniform Standards of Professional Appraisal Practice (USPAP), promulgated by the Appraisal Foundation.
All licensed and certified appraisers in California must comply with USPAP in appraisal assignments.