What Is an Appraisal?

As defined in USPAP, an appraisal is the act or process of developing an opinion of value. The valuation process is a systematic procedure the appraiser follows to estimate value. The most common type of appraisal assignment is to develop an unbiased opinion of market value.

Appraisals start with property inspection

Telluride is a mountain region surrounded by Lizard Head Wilderness Area, Sneffles Wilderness Area, and San Juan National Forest. Location and mountain views significantly contribute to value in this market. Telluride is a designated Historic Town comprised of restored Victorian homes built in the early nineteen hundreds. Mountain Village is over the ski area, accessible by Gondola, and the corporate center of operations to the Telluride Ski Area. Mountain Village is segmented into ski properties and golf properties. The areas outlying Telluride are a wide range of primary and secondary residences.

Following the inspection the first step is to develop highest and best use.

HIGHEST AND BEST USE: Highest and Best Use is that reasonable and probable use which will support the highest present value as defined, as of the effective date of the appraisal. Alternatively, it is that use, from among reasonable, probable and legal alternative uses, found to be physically possible, appropriately supported, financially feasible, and which results in highest land value. Simply stated, the highest and best use of a site is the perfect improvement that can be constructed on the site, which will produce the maximum rate of return on the capital invested.

Three approaches are applied to determine value.

Replacement Cost

The cost approach, also called the "replacement" cost approach, appraises the property from the viewpoint of a builder or contractor. The expenses of building a structure at today's costs are computed, the estimated accumulated depreciation is subtracted from the cost of the structure, and then an estimate of the land value is added to that subtotal. The result is a figure indicating the value of the property based on the cost approach.

Sales Comparison

The market data approach, as mentioned above, is one whereby sales prices of similar properties are compared. In comparing one property to another, it is realized that no two properties are exactly alike. However, by finding homogeneous properties in similar or the same area, one can overcome this problem. 

The market data approach has the most validity for the appraisal of single-family homes as well as lots and land.

San Miguel Appraisal, Inc, is experienced appraising complex properties in the Telluride Region. The sales comparison approach to value is usually given the most weight when an appraisal is for a real estate sale.

Valuation Using the Income Approach

The income approach, also called the "economic or capitalization" approach, appraises the property from the viewpoint of an investor. It determines how much someone will pay for a property in order to receive the income that the property is capable of producing.


San Miguel Appraisal, Inc is committed to provide accurate market data with credible results.