Getting your property valued is a necessity, regardless of whether you are a home owner or business owner. A brief look at the common property valuation methods will help you to debunk any myths you might have about these processes.
Valuation methods need to be put in place to make sure that the correct rules and regulations are followed. There are a number of different common methods that are used by most valuation companies, this includes:
· Comparable method: this method is pretty self-explanatory. This method will compare different houses or businesses within the same area to assess the relative value of any particular value. This method is normally used to understand what the Open Market Value would be. In some cases the comparative method may not represent the correct value, this is largely due to the fact that some houses/businesses within the area may have had to sell under pressure and subsequently were undervalued.
· Repayment method: this idea follows the idea by which the price of the property will be able to be repaid within 12-15 years based on its income. This is subsequently used during the valuation of rental properties, as such it will give the landlord an idea on how much rent they should charge to pay of the house within this time frame.
· Residual method: this looks into the land or plot development of a property. This value needs to be calculated to assess whether the development will be able to generate a profit after completion. The total cost to build the development will be taken into consideration as well as how much the property could potentially be sold for to generate the residual value.
· Cost method: a simple method which takes into consideration the cost of the actual site before development plus how much the property will be worth after the completion of the development. The cost of paying labour as well as other necessary payments will be taken into consideration during this valuation. The base cost is a good place for the valuators to have a good starting point.
It is necessary to understand these methods so that you know exactly what valuation would be best suited to you.
Why get a valuation for your home or business?
There are many reasons why you should consider getting a valuation for your home or business. Giving you an idea about what your property could be valued at, will help you to assess certain situations. Knowing the value will help you to get the correct insurance, which is extremely important to make sure that your property is completely covered against all situations. It is also necessary for tax purposes, trying to get a loan and for any tax purposes