The market for residential property (including small rural parcels) is driven by both micro and macro economic conditions – which impact upon market sentiment. Major factors impacting market sentiment include monetary and fiscal policy, along with job security. The sale of residential property is handled by real estate agents who typically charge a commission on sale. Valuation of these assets can be required for various reasons, including:
There are various methods for valuing residential property, however, the overall concept is common for each valuation.
International Valuation Standards (IVS) 2007 details the definition and application of valuation approaches for valuation reports as follows:-
Valuations of any type, whether undertaken to estimate market value or a defined non-market value, require that the Valuer apply one or more valuation approaches. The term “valuation approach” refers to generally accepted analytical methodologies that are in common use. In various States these approaches may be referred to as “valuation methods”.
Market based valuations normally employ one or more of the valuation approaches by applying the principle of substitution, using market-derived data. This principle holds that a prudent person would not pay more for a good or service than the cost of acquiring an equally satisfactory substitute good or service, in the absence of the complicating factors of time, greater risk, or inconvenience. The lowest cost of the best alternative, whether a substitute or the original, tends to establish Market Value.
In most instances, residential property is valued using both a Direct Comparison and Summation Approach.
Value considers, amongst other things, the specific attributes of the property being valued, including:-
The above features of the subject property (being valued) are then compared to similar properties which have transacted in the market place. A value is then assessed based upon a hypothetical sale of the subject property.
It is important to note that there are many other factors considered in applying value to a property. Specific market knowledge and transaction history is required to value residential property of all types.
Our 38 year history on the Central Coast is a key feature of our ability to value residential property. For further information, please contact Luke Chadwick.
Robertson & Robertson has 38 years experience in providing specialised residential valuation advice. If you are looking to sell or purchase or are seeking a property valuation for mortgage, taxation or legal purposes, our specialist valuers can assist you.
To enquire about obtaining a residential valuation or for property valuation advice in general, please CONTACT US.
