Florida Broker Practice Exam

What is the term for the process of estimating the value of real property?

1. Appraisal

2. Assessment

3. Evaluation

4. Valuation

The correct answer is: Appraisal

The term that refers to the process of estimating the value of real property is "appraisal." Appraisals are conducted by licensed professionals known as appraisers, who use various methods and techniques to evaluate properties. This process typically involves analyzing comparable properties, considering the property’s condition, location, and market conditions, and ultimately providing an objective opinion of value. While "valuation" is also closely related to estimating property value, it is a broader term that can encompass various methods and approaches beyond formal appraisals. "Assessment" usually refers to the process of determining the value of property for tax purposes, and is typically carried out by governmental assessors rather than independent appraisers. "Evaluation" is less specific in real estate contexts and can refer to a general assessment of something's worth or performance rather than specifically estimating monetary value. Understanding these distinctions can help clarify why "appraisal" is the most precise term for the formal process of estimating property value within the context of real estate.