Property Valuation Types
Property Valuations are mostly required for financing (mortgages, debentures and overdraft facilities) and asset (financial reporting, stamp duty, estate duty, sale and acquisition) purposes.
These are properties in which people live and this includes houses, apartments and townhouses.
These are properties used for business purposes, which includes offices, shops and supermarkets
These properties are used to manufacture or assemble products and this category can include factories and warehouses for large-scale storage.
These are properties used to grow food and timber – this category includes properties with homes on which the farmer or caretaker lives.
To arrive at the market values we use the following approaches as appropriate:
- Market Approach – comparing the subject asset with identical or similar assets for which price information is available. This is the preferred approach for all property types
- Income Approach – converting future cash flows to a single current capital value. This is used for income generating properties such as commercial and industrial property types; and
- Cost Approach – estimating the current cost of replacing an asset with its modern equivalent asset less deductions for physical deterioration and all relevant forms of obsolescence and optimisation. This is seldom used when there is quality information available that enables us to use any of the two prior approaches as cost and value are rarely the same. This approach is also mainly used for purpose built museums, churches and other similar properties which do not normally trade freely in the open market.
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