The term market appraisal is used to refer to the review that is carried out by the various kinds of financial institutions or the recommendations that are offered by the agents who deal with the estate business.
This market appraisal is done to ascertain for the fact that the project under which a particular product is being manufactured, is sold and realized at the best of its price value.
What is Market Appraisal?
A market appraisal is a form of an assessment or an evaluation that is done by some authorized financial institution or an agent who deals with the estate. They can recommend the various ways in which the products that are being manufactured or which are being sold, its value is realized in the best possible way and is also priced at its best in a given timescale.
The market appraisal thus refers to that formal assessment. In general, a market appraisal is something that one gets when one the owner of a property would ask their agent about what is the total worth of their property.
Thus the market appraisal is a kind of advice given by the agent to the owner of any particular property. This advice that is provided by the estate is generally in quite a proximity to the actual value of that property in the market. Also, the pricing may vary depending upon the direction in which the market is moving.
Thus it can make a huge difference. Now if a market is found to moving in the upward direction, then it is more like that the values of the appraisal will be lifted higher. And here the result that is obtained, chances are that it will be greatly influenced by the desire of the owner to sell their property and to list it with the agent he was in talks with at the first place.
Thus for an appraisal to be relatively high is not that common in the market. This appraisal will not be a proper valuation, so one can’t sue it with any particular lender such that the market value of the property can be well established.
Now people often tend to confuse between the valuation and the appraisal. Let us see how the two terms are different from each other. Now in the case of the appraisal, any real agent can give that to you, but when it comes to the ‘valuation,’ in such a case, an accredited value which usually occurs on the panel of the lender is allowed to give a valuation.
In the case of the valuation, only a relied upon lender can provide you with valuation when you will be applying for a loan. Now one thing to note is that here the panel to which the value belongs to consist of all the approved valuers for that individual who is lending the loan.
Factors in Market Appraisal
Now since that the market appraisal should be carefully taken into account as it would play a significant role in pricing your estate in the market, here are a few factors that you must take into consideration before going for market appraisal.
- The first thing that should be taken into consideration is that whether there are fundamental sales forces as well as the distribution network in the unit itself so that the products that are manufactured can be sold out.
- The second factor that should be taken into consideration is how the unit can capture the shares of the available market.
- The next thing is that if the desired price point is set for every individual product, then will the units be able to sell those products.
- Another factor that should be considered is that to analyze the market of whether it is a sizable potential market or not and what are the various marketing strategies that would be the most suitable and that are set by the unit itself.
- The next factors that should be taken into consideration are whether the products that are to be marketed, be delivered by the units from those sources from where it is deployed.
- And the last factors that should be taken into consideration are that after selling, the value of the return on investments obtained, will it be able to cover up for the cost of the loan or the equity. And on top of it after covering up for the loans, will it still be able to a fair amount of share so that the further sustainable operations will be carried out.
So these are a few factors that are needed to be taken into account in case of the market appraisal.
Components of Market Appraisal?
There are majorly two main aspects of the market appraisal. These are as follows-
Now let us understand them one by one.
1) The demand analysis
When any products are decided on to be manufactured, it requires to analyze an extensive collection of valid data and information. Also one needs to prepare for the estimates. By adopting these two measures, the demand analysis can be done effectively.
Now there are a few things that are required by the market appraisal for the demand analysis to be carried out effectively. These are as follows-
- The whole description of the product
- What are the different areas where applications of the product that is being manufactured can be seen?
- What are the various market scopes for those products so that it can be grown further?
- What are the various other competitions in the market that it will have to face from its competitors or its business rivals who too are manufacturing and selling a similar kind of the product?
- Then what are the various areas which can provide one with the competitive advantages?
- What should be the strategy developed to set the pricing of the product that includes having maximum sales and also maximum profit?
Now by the help of the demand analysis, it has been seen that if the environment of the market is highly competitive, those products become vital which are customized and have a short life span. Also, the demand analysis takes care of the needs and the wants of the customers.
It should be kept in the mind of the manufacturer. Along with that, there are various other factors like the cost of delivery, the functionality, the physical appearance of it, the existing and the future demands of the products are some of the factors that are taken into consideration in the demand analysis.
Also, there are three methods of the demand forecasting which are the trend method, regression method, and the end use method.
2) Market Analysis
Market analysis is one of the aspects of market appraisal. In this, the market analysis studies the various issues of the segmented market. Market analysis takes into consideration multiple things like the positioning of the product, the promotional strategies, the strategies adopted for the distribution of the product and also the analysis of the competition.
The primary objective of market analysis is to accurately define their targeted customers and the market that they will be completing it and then define it in terms of the size, the various opportunities for growth, the latest trends, and the sales potential.
Now the market segmentation can be done depending upon the type of customers that are to be approached depending upon their age, gender, demands, their buying behaviors, etc.
Thus by analyzing all the above factors, the market analysis is done.
What Is The Importance Of Market Appraisal?
The market appraisal holds quite an importance in the marketing field. Some of it is as follows-
- The market appraisal makes sure of the fact that that the project which is in focus has a sales force which is competent enough. Also, it helps in analyzing the distribution network so that the products that are being manufactured could be sold effectively.
- The other importance of the market appraisal is that with the help of it, the products can be easily sold at such price points such that it can in a future cover up for the loans that have been taken. And it also checks whether after the loans have been settled down, do still have enough money after the loan has been serviced, the units even have enough of the surplus, so that the further sustainable operations can be carried out effectively.
- Also, market appraisals ensure a potential market that can be met by the unit’s total capacity of the production.
- One more importance of the market appraisal is that it provides with a particular strategy which is well thought of so that the sales and the marketing can be carried out efficiently for a longer duration of the time.
Thus, a market appraisal consists of generally those recommendations that are made by the agents which prove to be quite effective when facing a competitive market.