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Property valuation
Valuation Methods
Need of Valuation
Value Theory
Valuation is both a
Science and an Art!
Valuation is both a
Science and an Art!
Valuation includes components
and knowledge of:
-mathematics
-statistics
-physical (land) planning
-urban planning
-rural planning/agriculture
Valuation components
-building construction
-sociology/human
behaviour
-common sense/feeling
Valuation of a building
depends on
type of the building,
building structure and durability,
on the situation,
Size of building,
Shape of building,
Frontage of building,
width
of roadways,
the quality of materials used
in the construction
present day prices of
materials
The valuation of a
building is determined
on working out its cost of
construction at present
day rate and allowing a
suitable depreciation.
1.Buying
or Selling Property
3.Rent
Function
of loans or Mortgage
5.Compulsory
acquisition
Information needed
Information about the property:
Land use
Land area
Building: size, age, standard etc.
Yearly costs and incomes
Other special conditions
Information needed
Information about the purchase
Seller : Mr A
Buyer : Mrs B
Date: 04-09-15
Price: 1 200 000
etc.
Price
Date of sale
Seller
Buyer
Information about the real property
Land use
Land area
Building: size, age, standard etc.
Other special conditions
Information needed
General information
Average replacement costs
Depreciation - time and percent
Average value of land
Information about the real property
Land use
Land area
Building: size, age, standard etc.
Other special conditions
Replacement
costs
Age (years)
10
Replacement costs
Depreciation 10 years 3,5 %
Cost of land
Cost value
Cost
value
1 000
- 350
200
850
Market value
Scrap value
Salvage value
Liquidation value
Insurable value
Book Value
The
Scrap
Salvage
value of a property or
an asset may be positive, zero or
negative. For example the
salvage value of RCC structures
is negative ,because dismantling
and removal will be costly. Scrap
value of machine is Positive
because it will be used for other
purpose.
Liquidation Value
Depreciation
is the gradual
exhaustion of the usefulness of
a property. This may be
defined as the decrease or
loss in the value of a property
due to structural deterioration,
life wear and tear, decay and
obsolescence.
HKSSAP
defines depreciation as
the allocation of the
depreciable amount of an asset
over its estimated life.
Rateable
Obsolescence
Progress in Art
New invention
Change in Fashion
Improvement in
Design
Change in planning
idea
New trends in
Market
Inadequate Space
Years
Land
value
Gross income
On situation
Road width
frontage
Depreciation Method
In
Walls
Roofs
Floors
Doors and
Windows
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