National Property Valuers – Our Blog

Independent & Accurate Property Valuations

Basic Assets Of Property Valuation

A number of different ways and approaches are there for property valuation and you must evaluate your property for a loan against its security.

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By definition property valuation is the method of assessing the worth of a property, a company or any specific item and is generally performed prior to the sale of the property or the asset going under the hammer.

Property valuation or asset valuation, most of the time, involves both objective and subjective measurements for a particular property or asset. The basic components depending upon which the value of a particular property or asset is determined is its absolute as well as relative value along with the pricing options models available for it that often require different input from it.

Cost approach for estimation

In property appraisal for the real estate market, the cost approach is considered as one of the three basic methods of valuating a particular property or asset while the other two being income and sale comparison. The basic premise of this approach is that, any potential investor under no condition should pay more for a particular property or asset than it would require building an asset equivalent of that and the construction cost of the property sans its depreciation value is used as the limit or metric of the market value.

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Valuation of your property has been always a very important aspect as financing a certain project or property actually depends on its valuation in the market and though it is a job restricted to professionals several options for valuating an asset or property is also available in the market and you can choose any one of them depending upon your actual requirement and preferences. Reviewing other nearby properties available for sale is the oft used method for market trend analysis though a number of other factors are also taken under consideration for the purpose like:

  • Comparable Property Method: In this method similar properties in the adjacent locality are taken under consideration. After finding the average value against which a unit area is sold in the neighborhood, it is multiplied by actual area of the property and further adjustments are made depending upon d advantages and disadvantages of the property under consideration.

  • Discounted Value Rental: This process project the value of a particular property considering its capacity for real estate growth in the area where it is located. It also includes a few other factors like supply and availability of properties in that particular location as well as the scope of capital investment there in future. In this particular approach to Property Valuation the future capital investment is discounted to present against the current interest rate that provides the valuation of the asset or the property.

  • Discounted Rental Value: This process of property valuation involves capacity of future real estate growth in the area where the property or asset under consideration is actually located and also includes potential property supply in the same neighborhood.

Valuation of a property by an approved and certified valuer is required by finance agencies as well as banks if it is used as a security for any loan and finding a property valuator might not be difficult at all as there are many of them in the market.

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This entry was posted on May 9, 2013 by in Property Valuation and tagged , .
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