What are the benefits of property valuation services? There are several benefits to using this service. Sellers or buyers can take advantage of property valuation services in the following ways: • Measure the current market value of the property. • Give a detailed report of the property. • Highlight the benefits of the property. • Highlight the geographical advantage. • Get expert advice and pointers to sell your home. • Determining the feasibility of future development projects • To determine the profitability and income potential of the property. Valuation Techniques When conducting a property valuation, a property valuer may use a variety of valuation methods. To arrive at the valuation figure, the property valuer typically uses the comparative method, investment method, and profits method. Some properties may require a more detailed analysis to provide additional flexibility in the property's end value. The five methods of property valuation are listed below: Comparative Approach This methodology, also known as Inferred Analysis of Property Value, compares the prices of properties in the same area. The final value of the property is calculated using the values of nearby properties. A close examination of similar buildings/properties with matching characteristics and dimensions is performed using this method. When determining the market value of a residential property, the comparative method is commonly used. Profits Approach Profits Methods are frequently used when valuing commercial real estate. This method is used to determine the market value of properties such as restaurants, rental office space, malls, and hotels. The valuer determines the property's market value by averaging the business's average operating income over the previous three years. The profit and loss statement of the company is used to secure this figure. Residual Method This valuation method is useful when an investor, developer, or owner is determining the value of a property for future development. The Residual Method helps in examining the viability of a property, whether it has potential for development, redevelopment, or rental purposes. When calculating the property value, the gross development cost, building cost, property builder/developer profit, and fees are all taken into account. Contractor's Approach The Contractor's Method, also known as the Cost Method, employs the replacement value of the property technique. This method is used when the Comparative Method and the Profit Method fail to provide an accurate estimate of the property. Each construction component, cost of each construction, current construction techniques, land value, and reconstruction cost are all added together in this method. To arrive at the final estimate of the property's market value, a representative depreciation figure is deducted from the previous number. Investment Strategy The Investment Method is a practical method of determining the market value of commercial properties. The property's market value is directly related to its income-generating potential. This method provides an accurate picture by converting income earned (both present and future) from the property into an approximate capital sum. The valuer in this case uses the discounted cash flow method, the future cash flows that the property owner will generate from the property.
Topics
