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.

Valuation of Commercial Property to Maximize Returns

Commercial property valuation is a service provided by certified appraisers to know the present value and ways to magnify it. For a potential buyer or a potential seller winning the bid is the ultimate aim. Commercial property values can assist them is assessing the worthiness of the property, and its future prospects.

Commercial Property Valuation includes four major factors like physical aspects, finance aspects, legal aspects and utilization aspects. Values give a clear report about a property based on the above four factors directly or indirectly.

Some the factors that can impact the value of a property are as follows:-
Market value - Even if the commercial property is located at the heart of a city, it won't get the expected price if the market conditions are unfavorable. Market value is the rate at which a property can be exchanged based on that day's valuation. As market value is a fluctuating one, professional values can help in detecting the best time to sell or buy a commercial property.

Value in use - This is the current value of the property and is based on the monthly profit receiving from the property. If the commercial space is given for rent, then on a monthly basis the owner will be getting a specific amount. When calculating the total value of the property, value in use also calculated to know its worthiness. Profit giving assets will be a good investment.

Value of investment - This will check whether the value of a particular commercial property balances with its market price. Total value will be above or below the market price, and property valuers can tell whether it is worth to buy a property.

Valuation of insurance - In Valuation it is important to check the insurance valuation of a property. Insurable value is the value of the property covered by an insurance policy. Most of the insurance companies give coverage based on certain important features of the property. This means, higher the coverage, higher the worthiness.

So many methods are used in valuation. Some of the commonly used methods that get positive response are comparable method, investment method and repayment method.

Comparable method - As the name indicates, this method is purely based on comparison. In the method the valuation is done by comparing similar commercial properties, its current market price, value in use, location of the property and demand for property in a particular area. This method helps is getting an open market value.

Investment method - This is calculated by measuring the yield of the property. High returns from a property will definitely be worth buying. By doing a commercial valuation you can calculate the returns from the property and compare it with the investment cost. This will definitely allow you to calculate and plan about an investment.

Repaying method - Most of the investors take loan from banks and financial institutions to finance in properties. Real estate valuation helps in calculating interest rates and amount of money to be repaid in specific time frame, say 15 to 20 years. Then they will calculate the land value after 15 to 20 years and the profit from the investment.

In the property business gaining huge profit is the major agenda and commercial property valuation can help a great deal in this.

Learning About Real Estate Valuation

Reckoning the value of real estate property is valuable for a variety of undertakings, including listing real estate for sale, real estate financing, investment analysis, insurance and taxation.

What is valuation concepts: for appraising the main consideration is to decide the property’s value. It is mainly for considering the worth of future prospects which would arise from that real estate. Consumer goods that are quickly used up are generally benefiting for a longer period of time. That’s the reason why an estimate of property’s value must be taken to see the economic and social trends. Governmental controls or regulations and environmental conditions must also be considered since they influence the four elements of value greatly, which are as follows:

Utility - this is the ability of investor to satisfy future owners' needs and desires;

Transferability - this defines the ease with which ownership rights are transferred from one individual to another.

Demand - this depicts the need or desire for ownership supported by  financial means.

Scarcity - this shows the finite supply of competing properties among investors.

When it comes to value vs. cost and price, value is not equal to cost or price, as cost refers to expenditure in actual terms, whereas price on other hand is the sum that is paid by someone for a specific thing. It is important to note that cost and price may affect value but they are not the determining value for any real estate property. For example: the selling price of a home may be $ 200,000, but its actual value can be relatively higher or lower, suppose if any one finds a serious flaw in it, the value will be considerably lowered no matter what the price.

Talking about the market value it is mainly an appraisal or estimate value of a property on a specific date. These reports are mainly seen and analyzed by the government agencies, businesses, individuals, mortgage lenders and investors when considering an important transactions in real estate.

The main aim of this is to determine the market value of a property with most probable price in competitive and open market. The actual price of property and market price, may not actually determine a property’s market value. For example: if because of threat of foreclosure a seller is under duress or if the property, without being exposed to  market was sold in private sale, then it is probable that it will be sold below the market value classified by professionals.

An accurate real estate valuation is important for investors, mortgage lenders, buyers, insurers and sellers.

Asset Valuation Services

Asset valuation services are of utmost importance for any businesses.  Valuation service help businesses to determine the real value of assets a company owns or intend to own. Valuation is beneficial for a number of reasons. Firstly it helps in laying down the future strategy and plan  for the owner and the company after they have a clear picture of the real value of the assets, they are able to better plan particularly if they decide to sell,   they can do so without suffering losses. Some assets, such as real estate, company shares, paintings, artifacts etc, keep appreciating with time.

If a company decides to dispose such assets in order to raise money for other investments or to earn a profit, it must first establish its real value. This is one of the instances where asset valuation services comes in. Asset valuation services that are offered by specialist help individuals, companies and organizations to know and understand the worth of their assets in the market. This enables them to make an informed decision. When companies want to acquire some assets, it is important for them to establish their exact value.

Valuation assists in negotiating a good price. Without valuation, a company can be forced to purchase an asset at a price, which is far above the market price. On the other hand, when a company knows how much worth the asset is that it intends to acquire, only then is it able to offer a price not above the valuation figure. Asset valuation services are also very useful when a business is looking for investors to pump in additional capital.

Individuals, financial companies or other investors will want to review the asset valuation report of a business before committing their money in to it. The valuation report helps them to gauge the risk of their potential investment. The other cases where the report can also be very helpful is: partnership business where one partner wants to buy off the other out of the business, and when a person is preparing a will or trust. Asset valuation is not an easy task, and it requires the services of highly skilled and experienced evaluators.

When you want to hire a valuation services firm to conduct this important task look for a company that is recognized, established and of good repute. An established company is more likely to do the job effectively and deliver the best results. So, before you hire a valuation services firm, check how long they have been in business. Make an effort to find out how the company is regarded in the industry. You can evaluate their reputation by checking whether they have worked with other large businesses. These former clients can also provide you with testimonials regarding their services. Lastly, do not forget to check whether their valuation services are reasonably priced.