House valuation document with small family house and magni… | Flickr

Evaluation By Comparison

The comparison method, or the market method. It consists of deducing the value of a good from the analysis of the price obtained from the recent sale of other goods as similar as possible.

To do this, during the “survey” phase of the appraisal, we use our sources of information which allow us to regularly update our databases. This method remains the most widespread. It is also recommended by the Courts.

Income Assessment

It capitalizes or updates an annual income. The method is based on the observation that the value of the property is related to the income that it provides (or can provide).

The Charter of Expertise in Valuation defines the methods by income: they consist in taking as a basis either an established or existing income or a theoretical or potential income (market rent) then dividing it by a rate of return, therefore to capitalize.
Income methods are also referred to as income capitalization or yield methods. They can be broken down in different ways depending on the income base considered (actual rent, market rent, net income), to which different rates of return correspond.

In the US, the base is generally made up either of the net annual rent excluding taxes and rental charges mainly in commercial property, or by the annual market rental value excluding taxes and rental charges mainly in residential.

Evaluation of Soil and Construction

It consists of separately assessing the two components of the building, the land, and the buildings, and adding them together. It allows either cross-checking with the classic method by comparison or the study of an asset that does not allow a direct comparison.
Depending on how it is broken down, this method is similar to the comparison method or the replacement cost method.

Recent Posts