There are a number of valuation methods that you need to familiarise yourself with, if you want to understand the property market. There are many ways in which to discover the true value of a property and many reasons why it needs to be done.

Some of the valuation methods are more popular than others. This is because they can be used to cover more of the bases than others. One of the most popular is the comparative method. The comparative method relies on comparison in order to give the final value. This is obviously extremely important when looking at the value of a home or commercial property. What it will do, is compare similar types of properties in a certain area. By doing this the method is able to provide the value of the property in question. This value is more commonly known as the Open Market Value. The Open Market Value will be able to inform you on how much the property is worth that you currently own or are interested in buying. In order for this to be truly affective the prices of the other properties surrounding need to offer a true reflection of their building. In some cases you will be presented with an approximate value due to the inaccuracies of prices from the surrounding properties. However, even an approximate value will give you a good idea on whether you do in fact want to go ahead and purchase or sell, depending on the circumstances.

Valuation methods are used to determine a number of different values. The residual value is used to estimate how much someone could expect to pay for a plot of development land. Not only will it work out the value of the land in question but is also used mainly to decide if the land is in fact a good investment. Property developers do not want to buy pieces of land if they are not going to be able to make any profit from it. In order to work out the residual value the property valuer may use the following formula:

Value of completed project less total development costs = value of the property in its present condition.

This might sound extremely complicated, but that is why you need to enlist the help of the professionals. A good property valuer will be able to explain in more detail how exactly the residual value is determined.

These two valuation methods are popular for different reasons. The comparative method can provide you with the information you need to sell or buy a property. The residual value can offer you insight on whether a plot development can provide you with profit in the future. Either way they are two methods that you need to be familiar with.

Getting professional advice on your property

If you want a professional valuation done on your property, you should come to us at The Property Partnership. Visit our website to find out more.