What methods are there to determine the real estate value?3 min read
Real estate experts use one, sometimes two out of three common methods to determine the market value of a property. The value of a property is determined either using the comparison value method, the income value method or the real value method.
Taylor Chartered Surveyor will tell you which one is better for you to buy a property. If you want to buy a property but don’t know about how to evaluate the actual value of the land then here in this article you will determine 3 different comparison methods that will help you buy property on your own.
It makes a difference whether you have the property valued as the owner for the purpose of sale, as a buyer of a property, or for the tax office. Depending on the purpose, you should have your property valued differently. At best, let us as a real estate agent know the matter so that we can evaluate your apartment, your house, or your property based on the purpose.
The Comparison Method
From the name 1 comparative value method it can already be deduced that real estate prices are compared with one another. First, one tries to apply the direct comparative value method. For this purpose, the recent sales prices of objects of equal value (same location, almost the same building, almost the same features) are determined.
Based on these prices, the current market value of the property can be determined very precisely, which helps you buy property, especially since it is possible to calculate surcharges and discounts for the various characteristics of each house.
If there are not enough current objects to compare, you can use the indirect comparison value method to fall back on average values from the expert committees and also determine the correction factors (surcharges and discounts) for your own property as precisely as possible.
The Earnings Method
The earnings method is used for rented objects or real estate intended for rent. First, consider the value of the property individually. The standard land value (determined by expert committees) is determined taking into account possible special features, such as a right of way.
The rental income minus all management costs is then determined. The result is multiplied by a multiplier (complicated operand that takes into account the remaining useful life and other aspects of the property). The result is the building income value.
The sum of the building yield value and the land value results in the market value of the property according to the capitalised earnings method. So that it helps you buy property easily.
The Material Value Procedure
Whenever there are no adequate comparative values for a house you live in and the comparative value method cannot calculate a realistic result, the real value method is used. This procedure is often used in addition to the comparison procedure in order to validate the results determined there or to be able to determine a more precise end result as a market value.
First of all, the value of the property is also determined using the real value method. This is preferably done using the comparative value method (similar properties in the same location). If this is not possible, for example because only a few similar properties are sold in a city Centre, the standard land value determined by expert committees is used.
The price for the buildings on the property is determined using the real value method in such a way that the entire costs for a replacement building (new building) of the property are calculated. The previous wear and tear of the property (age, defects, etc.) is deducted using mathematical formulas, so that a building value can ultimately be determined.
The value of the property and the value of the building together result in the market value of the property that will guide you to buy property easily
Taylor Chartered Surveyor is one of the best Professional Surveyors near Loughton Essex that will help you buy any land or survey any building. For details you can visit