Types of Appraisals

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Types of Property Valuations:

• Comparative Value Method
• Asset Value Method
• Income Capitalization Method

Comparative Value Method

In this method, the property to be valued is compared with similar properties in the vicinity. The basis for this is the collected real estate transactions in the immediate area. This method has its disadvantages, as it tends to provide more of a benchmark value. The actual value of a property, however, depends on many additional factors, including, for example: right of use, condition of the property, year of construction, floor, exact location, usage options, floor plan, infrastructure, etc.

Asset Value Method

In this method, the property price is determined by two factors. The first is the land value, and the second factor is the building asset value. The building asset value is determined by influencing factors such as the condition of the building, the year of construction, the total useful life and the remaining useful life. Establishing the real asset value of a property is a complex matter and should therefore be carried out with the utmost care. This method should serve as the basis for properties that are owner-occupied.

The Income Capitalisation Method

This method is used to determine the market value of properties intended to generate income through rental. The focus is therefore not on the value of the property itself, but on the highest possible yield. In this context, the owner aims to generate the highest possible return from the property. In the income capitalisation method, the price is determined from the land value, the building asset value, the building income value and the property interest rate. For potential investors, this method is generally the basis for a purchase decision.