Is Property Valuation a Really Necessary and how is Property Valued?

Valuation of property is the practice of estimating the actual worth of the asset. It could be a residential, commercial or acreage that would generally undergo this process in order to assess the present value of the property. Based on the best benefit that the land would provide and the neighboring facilities and accessibility to main junctions are factors that would increase the value of the site. It is based on the present worth that the selling price for the same can be determined in the real estate industry. Both the act of buying and selling needs property valuation process as the buyer can ascertain if the net worth he pays is significant and also the seller fixes a profitable margin upon the valuation basis.
What is the Need for property valuation?
* It is the first and foremost thing that is looked for when customer approaches for loan against property and home loans. It is based on the net worth of the property and the income of the applicant the loan is sanctioned.
* It would be required in order to plan for sale of the property
* When we buy a property we would look into the current worth and
forecast the future merit of the asset before purchasing it.
* Tax requirements met
Basis of evaluation:
There are two main categories that can be classified according to the International Property Valuation standards viz.
I. Market Value based and
II. Others
Market value approach:
This is a standardized approach that has a set of methods used by professional property analyzers who applies them in calculating the significant value of the possession. The fair market value of a property is the gross value of the same which has opportunities of increasing and decreasing with the growth in the surrounding areas. Hence the properties are fixed sale prices in and around the value that is calculated. Generally each commercial property valuation company adopts different methods and approach to the calculations; even then the resulting output values should be more or less similar depending upon the changes in the market environment.
Others:
There are other factors that are directly proportional to the property valuation method other than the market value that is regulated. The former being the standardized segment of valuation there are supplementary factors viz.
* Cost of generation: Contingent to the fact and figures that would cost to generate / build a facsimile of the same sort the value of the property is determined in permutation to other factors as well.
* Surrogating Costs: Restructuring and reconstructing costs of the property also stands as a factor that influences the value of the property.
* Whereabouts: The most important aspect is where the property is located and surroundings.
* Building condition and structure: The appearance of the property, the condition of the building, type of territory if it a land, and their structure adds on to the previous point explained.
* Approachability: As said at an earlier time the property needs to be easy to access and reach.
* Legislative restrictions if any: Sites and properties which are free of any judicial restrictions and conditions are easy for valuating without difficulty.
With such structured valuation methods in place and with the help of professional property valuators we can easily forecast the worthiness of a property and the profitability the owners and buyers will gain.