Business Glossary

1. estimate of the value of an asset. An asset may be a piece of property, a collectible, or a precious metal. In the case of property, for example, an appraisal is made for the purposes of: (1) allocating the purchase price to the assets acquired (e.g., land, building, equipment); (2) determining the amount of hazard insurance to carry; (3) determining the value at death for estate tax purposes; and (4) determining a reasonable asking price in a sale.
2. activities such as inspection and testing of materials, in-process items, finished goods, and packaging.

written estimate of market value by a qualified appraiser. Appraised value is one of the key factors determining loan size in loans secured by real estate. The estimated value of real property is based on replacement cost, sales of comparable property, or expected future income from income producing property.

professional opinion or estimate of the value of a property. For example, a property owner may have an appraisal made of a specific property to determine a reasonable offering price in a sale; to determine the value of the property at the time of the gift or death for estate or gift tax purposes; to allocate the purchase price to the land and improvements; or to determine the amount of hazard insurance to carry.

valuation of property for damage resulting from an insured peril or for establishing the base amount of insurance coverage to be purchased. If an insured and an insurance company cannot agree on the amount of an insurer's liability for a property loss, the policy may specify that, upon written request, the dispute is submitted to appraisal. Usually, each party selects an appraiser and the two appraisers select a disinterested umpire. Disagreements by the appraisers go to the umpire, whose decisions typically are binding.

a professional opinion or estimate of the value of the property. Also, the act or process of estimating value.

Examples: A property owner may have an appraisal made of a specific property to:

• determine a reasonable offering price in a sale
• determine the value at death for estate tax purposes
• allocate the purchase price to the land and improvements
• determine the amount of hazard insurance to carry