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House valuation – buying or selling your home
Independent House Valuations – Direct Comparison and Summation Method
Residential Property can only be described as ‘broad’ in its type, age, location, buyers etcetera. It’s our job as Registered Valuers to know the answers so in turn we can provide our clients with reliable and objective advice on each and every job.
- Residential property assessments are not just figuring out what the land is worth and then adding the cost to replace the house on that land;
- An experienced residential valuer will prepare and spend the up-front time conducting the research on sales within the street and the immediate area;
- When valuing residential properties sales of both existing houses needed along with vacant land sales.
This then gives us the basis for two valuation approaches, the Direct Comparison and Summation Method.
Let me explain some more:
- The Direct Comparison Approach examines the comparable sales of improved properties within the subject street and local area;
- Where possible we try to compare like with like and also include evidence that is both inferior & superior to the subject property.
- Our Valuers look at a minimum of 4 to 6 comparable house and land sales;
- Each sale is analysed and compared to the subject within an excel analysis sheet;
- The analysis of each sale by Direct Comparison is used to attribute a value for the subject property and creates a value range;
- Each sale is also summated back to show both a land value and added value of improvements;
- The Summation Method; together with vacant land sales gives us a guide to assessing a land value for the subject;
- To the assessed land value we then add the depreciated value of the dwelling and any other improvements on the land, to arrive at a total valuation figure under this method;
- After applying these two (2) methodologies, we should feel confident about the valuation assessment