3 Ways properties are valued



Estimating the value of a property is necessary for a variety of endeavours, including financing, sales listing and investment analysis. It’s a complex process, but don’t fret! This blog will guide you through the methods for completing property valuations.


Method 1: Sales Comparison Approach

The first method, and relatively the most straightforward, is the Comparative Market Analysis (CMA). This method compares the sales prices of similar properties in the same area to determine the value of a given property. It looks at factors such as the size, location, and features of the property to provide an accurate assessment of its value.


Method 2: Cost Approach

Another commonly used method is the Cost Approach. This method looks at the cost to replace the property with a similar one. This approach is typically used for commercial properties, as it can be difficult to compare different types of properties.


The cost approach uses an estimated cost of building a property to determine a fair value for paying for the property.  This approach is useful when the property being appraised is a type that is not frequently sold and does not generate income. Examples include schools, churches, hospitals and government buildings.


Method 3: Income Approach

The final method is the Income Approach. It is often used for rental properties, and looks at the rental income generated by a property to determine its value. It looks at factors such as the number of bedrooms, bathrooms, and other amenities that can affect rental income. Investors like to adopt this approach to determine the value of a property based on potential future profitability.


Depending on the type of property, different methods may be used to come to an accurate assessment of its value. It's important to remember that the value of a property is a constantly changing figure, and it's important to stay up to date on market trends and values in order to get an accurate assessment.