Understanding Property Valuation

Assessment of the property isn’t as straight as you might think. A valuation is a dynamic problem where a number of considerations need to be weighed. Checkout¬†Property Valuation.

Only a chartered surveyor may perform separate valuations. While estate agents will provide you a guidance on what anyone will pay for your land, they can’t be counted on to have unbiased and precise valuations.

Non-professionals should get their own valuations completed. The three theoretical approaches to assessing a house ‘s value are:

The approach to costs

The equivalent form of selling

Earnings strategy

The approach to costs

The cost approach calculates the value of any improvements by adding the land value and the depreciated value. When used on newer structures it is considered reliable but tends to be less reliable for older properties.

The equivalent form of selling

The comparable sales method estimates a house ‘s value by comparing it to similar property prices sold in similar locations within a recent timeframe. This is useful when there is good evidence of past sales and is the most prevalent method on the market for residential property. This represents real selling costs, but neglects whether or not the expenditure in the land would be competitive.

Revenue Approach

The approach to revenue is when the present value of the property is estimated on the basis of projected future net income, thereby focusing on the profitability of an investment in the property. However, in contrast with the total economy, it neglects its value.

There is no easy way to measure the worth of the property because in the end it is supply and demand that decide a house’s real price.