What is Property Valuation?

Property valuation is the process of determining the monetary value of a property, usually in the context of buying, selling, or financing real estate. It's crucial for various reasons, including:

Buying and Selling: Both buyers and sellers need to know the value of a property to negotiate a fair price.

Financing: Lenders use property valuation to determine how much money they are willing to lend against the property as collateral.

Taxation: Property taxes are often based on the assessed value of the property.

Insurance: Insurance companies need to know the value of a property to determine the appropriate coverage and premiums.

Property valuation can be done through several methods, including:

Sales Comparison Approach: This method involves comparing the property to similar properties that have recently sold in the same area.

Cost Approach: This method involves estimating the cost of replacing the property with a similar one, taking into account depreciation and other factors.

Income Approach: This method is commonly used for commercial properties and involves estimating the income the property can generate through rent and then determining its value based on that income.

Professional appraisers typically conduct property valuations, using one or a combination of these methods, depending on the type of property and other relevant factors. They have to adhere to the standards and guidelines as laid out by the governing body within each country.