The best method of real estate valuation (real estate) in 2020

Valuation is a very necessary job, is a top priority before deciding to buy and sell any real estate business of the business. We would like to share the common real estate valuation methods, which are highly appreciated by industry experts and bring about practical results.

5 METHODS OF IMPORTANT REAL ESTATE PRICE APPRAISAL

Direct comparison / comparison method

The comparative market-based price method of real estate has many characteristics that are quite similar to the properties that real estate objects are considering, to estimate the real value of it.

This method is often used to assess the value of homogeneous assets such as apartments, condominiums, blocks of houses built in the same style, separate and semi-detached houses, workshops, houses. warehouse on a premises, office groups and store groups.

+ Advantages: This is a simple method of real estate valuation, widespread and most used in practice. The pricing method is less technically difficult, demonstrates market appreciation, is the basis, or the input, of other methods.

+ Limitations: There must be deals on similar properties in the same area before they can be used for comparison. The evidence information is often historical, so if the market moves, the information quickly becomes obsolete and then the accuracy is low. This method requires appraisers with extensive experience and market knowledge to be able to conduct appropriate valuation.

Cost method

Cost method, also known as cost method. A cost-based valuation method that creates an asset similar to an asset subject to valuation, to determine the market value of the asset subject to valuation.

This method is mainly applied to the valuation of real estate which do not have or rarely happen to be bought and sold on the real estate market such as churches, schools, hospitals, offices, power plants, houses. chemical machines, refining facilities ...

+ Advantages: The method is simple, easy to apply and has a solid basis for recognition because it is based on market value evidence.

+ Disadvantages: These properties must have complete and accurate information on construction costs, as well as historical data. Costs are not always equal to value and there are costs that do not create value. Appraisers must have knowledge and experience in appraising certain property prices on construction and construction costs.

Income method

Income method is also called investment method or capitalization method. This method is based on the average future annual net income from a property, corresponding to a certain percentage (%) of the return on that property to calculate the exact value. its. This method applies to assets that are likely to generate income or are in the form of investment.

+ Advantages: The method of income is simple and easy to use, based on financial basis to calculate so very scientific.

+ Cons: Parameters to calculate the value of real estate requires high accuracy. Their identification must take place under expected conditions, so accuracy is often limited.

Surplus method

The surplus method is also known as the hypothetical business analysis / development method. This method is often applied to calculate the value of properties not according to the current use status, but based on the purpose to be used in the future.

+ Advantages: This method is applied to calculate the capital value of real estate development potentials.

+ Cons: Difficult to identify the highest and best use. All estimates of costs and sales prices may vary depending on market conditions. Real estate appraisers need good knowledge, skills and experience to estimate all the different items.

Method of deduction

The valuation method determines the value of land use rights of land parcels and assets attached to land by subtracting the value of properties attached to land from the total value of real estate.

+ Advantages: The deduction method is usually applied to determine the value of land use rights of empty land parcels, in case there is not enough information on the market.

+ Disadvantages: Costs are not always equal to the value of assets and there are costs that do not create value. Appraisers must have certain knowledge about construction, cost of construction and must have experience to be able to apply this method.

Above are the common real estate valuation methods currently applied that we would like to share for your business to find out. With good knowledge and accurate pricing information, when buying or selling, businesses will avoid being pressured and the price difference in the market today.

Capturing the value of your assets will therefore make it easier for businesses to carry out their different business activities. To get detailed information about real estate valuation, real estate valuation ... please contact immediately:

Indochina International Investment & Appraisal Joint Stock Company (INA)

• Address: 121 Nguyen Van Troi, Ward 12, Phu Nhuan District, Ho Chi Minh City
• Hotline: 0934 252 707 / Email: info@inavn.vn