MOST COMMON PROPERTY VALUATION METHODS part 1/3
Most Common Methods of Valuing
The following examples will assist you in understanding the three most common methods
utilised for valuing real estate, the following are simple and basic examples only, to thoroughly understand and utalise these methods takes many years of business practice, seek professional advise as once again these are only common examples and should not be used under no circumstances.
COMPARABLE, CAPITALISATION and CONSTRUCTION.
1. Comparable Sales:
This may be the most common method of valuing real estate; the process involves a collection of sales that have taken place in a particular area. Once the information has been collected each sale has been characterized and utilised as a comparable to the subject property.
A fine example of this method may be that over the past six months, (5) five sales have taken place in a particular Street, each property will be characterised by its
Size of land and attributes,Location,Topography, Aspect, Improvements and zoning.
The valuation will provide a thorough report along with the valuers reasoning on how they arrived at the valuation. They will then date the valuation and also apply their licence, the date is a very important part of the process as markets can fluctuate.
Once again we do not except any responsibility for the above examples and urge people to seek professional advise if required. The above information has been illustrated for simple explanation only regarding the three most common methods of valuing real estate.