In order to determine the scope of the work required to create the appraisal report, an appraiser must determine the intended use of the appraisal report so they will know which type of valuation to use when preparing the report.
There are several types of valuations, but listed below are the three most common ones.
Fair Market Value
The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under the compulsion to buy or the compulsion to sell and both having reasonable knowledge of relevant facts.
The cost of replacing the property destroyed when the loss occurs (typically used for insurance purposes).
A financial condition existing at the time of the sale so to require a sacrifice by selling far below the appraised value.