PROPERTY VALUATIONS METHODS

Property valuation is important for making informed investment decisions. Investors need to know the value of the property before deciding whether to buy or sell.

1 Comparative market analysis (CMA)

This method involves analyzing the prices of recently sold similar properties in the same area to determine a property’s value.

2 Income approach

This method is used for investment properties and involves calculating the property’s potential income stream based on rental rates and occupancy levels.

3 Cost approach

This method involves estimating the cost to replace the property with a similar one, minus depreciation.

4 Sales comparison approach

involves comparing the property to similar ones that have recently sold, taking into account differences in features and location.

5 Gross rent multiplier (GRM)

This is dividing the property’s sale price by the annual gross rental income to determine the property’s value.

Property valuation provides an accurate estimate of the value of the property, which is crucial for setting the right price. An overpriced property can deter potential buyers, while an underpriced property can result in a loss for the seller.