Property Valuation : How To Value A House?

The evaluation of a detached house can be done by several types of approaches.

The methods most commonly used to determine the market value are:

– the method by comparison ,

– the ground and construction method ,

– the method by the capitalization of income .

The method by comparison consists of comparing the asset subject to the Property  valuation appraisal, with transactions carried out on equivalent assets in kind and in location, on a date as close as possible to the date of the appraisal.

Knowledge of the changes that have occurred makes it possible to retain, as a point of comparison, properties that are similar in their condition, location, size, size, urban planning status, etc. .. to criticize it and make the necessary corrections to determine, by comparison, the value of the building examined.

This method is made possible by the perfect knowledge of the evolution of the real estate market and the permanent follow-up of the sales of buildings, both public and by mutual agreement. Care must be taken to ensure that these sales are made under normal conditions and with sufficient publicity.

After the examination and the study of the retained elements, one will be able to fix the value of the good. On the practical level of application of the method, the following main descriptive elements will be retained:

– location,

– surface area,

– easements,

– urban planning situation,

– possibility of extension,

– dilapidation,

– orientation,

– land area.

The soil and buildings method consists in fixing, on the one hand, the value of the land considered as bare, and on the other hand, the current cost of rebuilding an identical building, in new value at which various corrective coefficients (Material and technological dilapidation and possible repairs) will be made to take account of the value of the property. It is necessary to proceed in two phases: We are in the presence of a congested ground since it is not bare. A discount should be applied to the actual price of the land. It can be estimated that a piece of land that has already been built up is burdened with the construction that is on it. It is advisable to take 80% of the full value. Current practice is to apply a reduction of 40% in the case of total occupancy. The abatement does

For the construction, we start from the replacement value of the identical construction, to which we apply various corrective coefficients.

The corrections to be made are of various kinds, so as to take into account changes in the value of the property since its construction, i.e. material, technological or economic obsolescence, as well as environmental factors that may have consequences. administrative, regulatory and town planning decisions (expropriation for public utility, traffic changes, access changes, new town planning rules, etc.).

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