Know the importance of the property valuation and its methods
Thinking of property valuation is like a big expenditure? Then you are completely wrong. It is an investment knowing the actual value of your property which is beneficial for you from various aspects. Whether you want to sale the property, purchase any property or want to keep it on rent. The value of your investment property should be known to you.
So to know the property valuation (which is must for insurance and taxes too). Thus it is good to ask property valuers melbourne to find the fair value of your real estate property.
How to find the property valuation then the answer is – through home appraisal. A home appraisal is the professional opinion given by property valuer about the value of real estate property. An appraiser is an expert who determines the fair market property’s value. Though various factors like geographical locations, market conditions affect the property value.
Comparison method – The sales comparison approach method is the most common among all the property valuation methods. It is commonly used for land valuation and residential building valuation. In this one compare the subject property with the same type of property as the name of the method suggested. The properties used in this method to evaluate the price of the property are called as comparables. The consideration factor of comparables are they should be same like subject property and should be sold within a year under normal market conditions.
Mostly three four comparables will be needed to evaluate the property value. It’s next to impossible to find the two comparables exactly like the subject property. So the question arises then how this method can be accurate to find the property value?
So to adjust the difference among comparables some adjustments are made. As various factors are being taken into consideration like location of the property, market status or conditions, physical aspect of the property like interior and exterior of the property, age of the property and more.
2. Cost Approach –
Among the main property valuation methods the second most common is cost approach. Though it is not useful for the valuation of residential property or income property. This method is commonly used and applied on the real estate properties which are usually constructed but not sold like schools, institutes, government buildings, hospitals and more.
Firstly the property land should be estimated then the building cost. Though there are various ways to estimate the building cost. After finding the property valuation i.e cost of building and land value the depreciation costs are subtracted. Mainly three types of depreciation are considered like physical deterioration, functional obsolescence, economic obsolescence.
3. Income capitalization –
Income capitalization approach, the last one approach used by property valuer for property valuation. ICA (Income capitalization approach) is widely used for income properties. Residential Buildings, multi family homes, commercial real estate, rental buildings valuation can be estimated via this approach. Direct Income capitalisation focuses on property’s income.
Knowing the property valuation method is beneficial for property appraisal. For all your queries and requirements related to real estate property valuation, contact or visit (as per your convenience) Melbourne property valuers and get to know the right value of your property.
Besides from residential property valuation, property valuers melbourne also provides the property settlement valuation, rental valuations, pre sale valuation, pre purchase valuation, compensation valuation, internal accounting valuation, mortgage security valuations, industrial property valuations, property settlement valuations, asset register valuations and more.