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Updated by Herbert Vic on May 28, 2015
Headline for Property Valuation Methods
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Herbert Vic Herbert Vic
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Property Valuation Methods

The most common valuation methods include the comparable, residual, investment, cost and repayment methods. A professional valuer uses the most appropriate method depending on the property and its location.

1

Intro

Property valuation companies use different methods to determine the accurate value of a property. The valuation methods used often depend on the type and location of the property. The method used to value to value a newly constructed building may be different from the one used to value a used property on sale. Valuations methods often give different values for the same property. The most common property valuation methods are outlined below.

2

The cost method

When using this method, valuation companies sum up the cost or value of the site on which a property is built and the actual cost of building or construction. The cost of construction includes the cost of materials, contractor’s fee and labor among other things.

3

The comparable method

In this method, the valuer compares prices of similar properties in the same location to estimate the value of a property. Actual prices are used in this case and not published prices. The valuer determines the open market value of a property using this method.

4

The residual method

This method considers the profit that a buyer would make from developing the property. In this case, the value is determined by subtracting the cost of development from the value of the developed property. The valuer also accounts for possible appreciation or depreciation of the developed property.

5

The investment method

Valuers use the expected yield or return on investment to determine the present value of the property. Buyers will often compare the yield from a property with yields from other possible investments. If the expected yield from a property is higher than other possible returns, the property’s value will be high.

6

The repayment method

The valuation method considers the expected income from a property and the possibility of repaying within a certain period. The value is estimated as the total income from the property within the specified period less any taxes and maintenance costs. The method also accounts for possible capital appreciation and increases in income in the future.

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Conclusion

Valuation WA has competent staff that is experienced and conversant with all these valuation methods. The company will ensure that you get the most accurate value of your property using the most appropriate method. If you are looking for professional valuation services, visit our website http://www.valuationswa.com.au/ today and contacts us. You will also find all the information you need on property valuation.