
Valuation method overview: The comparative value method
A professional building appraisal often uses the comparative value method if there are a certain number of comparable properties for the type of real estate in question. These usually include condominiums, undeveloped land, and row houses. In large cities, it is sometimes possible to find residential units of similar size and layout in the same building or on the same street. This makes it easy to compare prices.
If there are not enough similar properties in terms of location, size, amenities, age, etc., this method should not be used and the asset value method should be applied instead. We will explain what this involves later in our series.
The purchase price collections of the local expert committee are used as the basis for a comparative methodology. Here, all notarized real estate transactions are collected and analyzed anonymously.
However, a qualitatively reliable assessment is only possible if there is a sufficiently large number of comparable sales. Alternatively, the standard land value map, which is also maintained by the expert committees, can be used. The overview is derived from the purchase price collection. Among other things, this lists the structural use and the land value in the respective locations within the municipality. The property value can also be determined using this comparison.
In addition, the building expert will take surcharges and discounts into account when determining the value. If the property is exposed to environmental influences or is located on a busy road, these are negative factors that reduce its value.
It is important to note that the value of a rented apartment that is to be sold as an investment should be set at around 20 percent lower than that of an unoccupied property. This is because most prospective buyers are looking for a new place to live themselves. If they want to move into a rented apartment, they must give the tenants notice of termination for personal use. This type of termination is complicated and often lengthy.
Would you like to have your property professionally valued but don't know which method is best? Feel free to contact us.