What are the methods of property valuation ?
You own a property and wish to proceed with its valuation. There are several criteria to take into account, depending on the location of the property and the period of use. To make it easier for you to value your property, we have put this guide at your disposal. It contains all the main methods you need to use in order to proceed with the valuation of your property. Enjoy reading it!
The market method
Also known as the comparison method, the market method is a procedure that consists of making a deduction of what the property to be valued could cost in relation to another similar property. At this level, you need to be sure that your property has the same characteristics as the one being compared. These characteristics include consistency, quality, references and the condition of the property being valued. For further explanations, please visit the website https://www.ellendewittrealestate.com/.
On the other hand, if it is a built house that is to be valued, you must make the valuation in two criteria. The plot on which the house was built and the building itself. Thus, you must add the value of the plot to the value of the building.
The financial method
Following the comparison method, you also have the financial method. This method, also known as the capitalisation method, consists of putting forward the benefits that the property brings you. This discounting exercise very often concerns rental properties. Here, it is a matter of relating the value of the property to be valued to the income that is recorded for it. A rental and property management agency is best placed to help you in this respect. With the latter, you will have a perfect estimate of your property.
Other property valuation methods
Apart from the market and financial methods, you can also have the replacement cost method, the cash flow method and the professional valuation method.
- The replacement cost method consists of pricing the property by highlighting the originality or precariousness of the property. This method is used much more with the market method.
- The cash-flow method consists of estimating the value of your property according to what it can bring in as profits in the future. This method is combined with the financial method.