There are a number of methods to carry out a property valuation, it comes down to knowing the advantages and disadvantages. It is also important to understand which valuations methods should be conducted to give you the most accurate valuation possible.

There are many reasons why you need to get a valuation of a property done. Whether you are wanting to sell, get a loan or just need information for tax purposes, these valuation methods will give you the facts. There are 5 main methods that are the most popular:

  1. Comparable method: this relies on comparison. Basically it will compare similar types of properties within the area to give a relative value of a particular one. In most cases this method will provide you with an Open Market Value.
  2. Repayment method: this method puts into practice the idea of being able to repay the price of the property within 12-15 years. This is important if you are considering renting or buying a new property, as it will provide you with the facts on how long it should take to pay it off. It also provides you with the opportunity to understand how much money you are putting into the property over that period of time.
  3. Investment method: this is a good method to use if you are looking to make some profit on the property you have bought if you decide to rent it out. The idea is that the asking price to sell, compared to the asking price to rent will be calculated to create the yield. The higher the yield in the greater the return will be on your investment. For example, a property with a R200, 000.00 asking price and R600.00 rental per month will provide a 3.6% yield.
  4. Residual method: this method looks into discovering what the residual value of the property is. This means working out how much a property buyer would be prepared to buy for a plot development. This is done by working out how much it will cost to complete the project and then minusing the total development costs from this value. This will than give the property developer an idea on whether or not the land in question is a good purchase and investment.
  5. Cost method: is similar to that or the residual method, in that it looks into the price of the site that the building was built on as well as the price of the building. Together these will provide the base value of the property and subsequently is a good starting point for someone needing to insure the property.

Using the right method for your needs

In order to use the right method for your needs you will need to seek the advice of the professionals. Here at The Property Partnership we can offer first class valuation services. For more information on our services you can visit www.property-partnership.co.za, when it comes to property valuations it is best to trust in the expertise of the professionals before making any hasty decisions.