As a longtime real estate property appraiser and builder in Central Florida, I learned long ago the essentials for creating and assessing value. Whether you are a buyer or seller, these values will strongly effect you at some point in time during the market transactions. That being said it is worth learning how to create and assess such value.

The crucial economic factors that create and sustain value are:
1. Desire
2. Utility
3. Scarcity
4. Effective Purchasing Power

The interaction of each of these factors is reflected and visible in the timeless principle of supply and demand. Desire is a buyer's want for an item to satisfy an actual need (tangible or intangible). Desire can be known and gauged by determining the motivating forces driving a person.

Utility is the ability of an item to satisfy a human want, need, or desire. Such can vary based on the wants and needs of each individual. Sometimes improving the usefulness and quality of an item can increase the demand for it. Nevertheless changes in utility can only go so far toward augmenting demand.

Scarcity is the present or anticipated supply of an item relative to the market's demand for it. The more limited and unavailable an item is, the more valuable it can become based on demand.

Sometimes just the mere illusion of scarcity can cause demand to rise and thereby inflate pricing. Salesman are very clever at creating the illusion of scarcity and trying to impart urgency within their potential buyers to procure a quick sale.

When the availability of an item is limited somewhat, needs and wants can be better assessed among the competing alternatives. Whatever is abundantly available is commonly taken for granted. Air is just one precious commodity that seemingly has no definable economic value.

Go however to India or China where pollution is thick within industrialized regions and suddenly oxygen becomes more valuable to you as it is there more scarce. Prime real estate free from human interference is no different.

The final contributing factor to value is effective purchasing power, which is the ability and willingness of people to pay for goods and services that they desire. When purchasing power translates desires into demand, a means of exchange arise to acquire that which is desirable. That means of exchange is commonly national currency, here known as dollars.

With the international state of affairs as they are, the U.S. dollar is on the decline. Gold and Euros are increasing in value as oil rich nations are preferring them rather than the dollar for payment. That being said the purchasing power of the dollar is not what it used to be. This further makes real estate a lovely investment indeed to sustain one's wealth.

Creating value is one thing, sustaining it is a far more tedious matter in a highly competitive market.

Paul Davis is Central Florida's favorite and most reputable property appraiser frequently called upon by banks, homeowners, and savvy real estate investors to assess property values. A builder for over twenty years and also a real estate broker, Paul Davis brings a wealth of knowledge to the table as an appraiser.



Paul's company Midstate Appraisals serves Central Florida (Lake, Orange, Seminole, Osceola, Sumter and Davenport in Polk counties).



Contact Paul Davis and Midstate Appraisals for your next appraisal:



Office: 352-242-9973



Cell: 352-636-6672



Fax: 352-242-4912



midstateappraisals@earthlink.net



www.midstateappraisals.org