Real Estate Value Estimation
The process of estimating the value of property is known as valuation. Valuation gives useful insight to both the buyers and sellers for estimating the approximate worth of a house. There are many ways to valuate the real estate property and one can also use a combination of the below said methods.
Comparable Sales Method:
The buyer collects relevant data for comparable properties. Assets with similar characteristics like size, location, conditions, building regulations, neighborhood and utility are identified. Transaction characteristics like transaction date, means of payment and processing speed is considered.
The average rate per unit area at which similar properties in the neighborhood were actually sold is first found. Any specific defects in the property or advantages method, ignores the much finer ingredients like location and neighborhood.
Discounted Value of Rentals:
Discounted value of rentals aimed at the future rental appreciation of real estate. It is estimated by finding out the growth in demand for real estate and availability of properties. This demand supply estimations give a fair idea on the value of a property.
Automated valuations are instant and cost effective and are generated computer models. Automated valuation models use historical data that is indexed to predict current house prices. But, these do not incorporate any real comparison to other properties in the neighborhood.
Income approach is also called the fundamental or intrinsic methodof real estate value estimation. Income approach focuses on the value of the property rather than comparatives. The present worth of real estate is estimated on the grounds of projected future net income like the real and resale value. It has an ability to measure a real estate’s ability to generate and maintain revenue.