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Understanding Property Valuation
Independent valuations can only be performed by a chartered surveyor. Although estate agents can provide you with a guide as to what somebody may pay for your property they cannot be relied on to provide objective and accurate valuations. It is possible to for non-professionals to do their own valuations. The three theoretical approaches to determining the value of a house are: The cost approach The comparable sales method Income approach The cost approach The cost approach calculates the value by adding the land value and the depreciated value of any improvements. It is considered reliable when used on newer structures, but tends to be less reliable for older properties. The comparable sales method The comparable sales method estimates the value of a house by comparing it to prices of similar property sold in similar locations within a recent period of time. This is useful when there is good evidence of previous sales and is the most prevalent method in the residential property market. It reflects actual market prices, but neglects whether the property investment will be profitable or not. Income Approach The income approach is when the present worth of the property is estimated on the grounds of projected future net income, thereby focussing on the profitability of a property investment. However, it neglects its worth in comparison to the overall market. There is no perfect method of assessing the value of property and in the end it is supply and demand which determine the actual price of a house. Article Directory: http://www.articledashboard.com This article was written by Richard Tuck of Online Estate Agents Turtle Homes. Experience a new way to sell a house online and find a property online in the UK. Visit our online estate agency website. |
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