Valuation cannot be tied up by rigid laws of nature or science. It also can not work under fixed and unflexible set up of principles because it has great dependence in human nature and individual's thinking. It can not be said that vacant flats are always required to be valued on comparable sales method. Some times circumstances may demand value estimation by rental method. Hence two flats in same building may have different values for same area.

Let us see how meaning or value of property goes on changing with different adjectives attached to it.

What is property valuation?

The process of estimating the value of real estate property is done by various method as illustrated below.

Comparable property method

The average value of rate per unit area at which similar properties in the neighborhood were actually sold at is multiplied by the actual area of the current property. Adjustments to the calculated value are made to account for specific defects or advantages in the property under consideration.

Discounted value of rentals

The future rental earning capacity of the property is projected based on a detailed study of the growth of demand for real estate in the neighborhood as well as the potential supply of properties in the location to project likely capital and rental appreciation of the property. These future cash flows are discounted to the present at the current interest rate. This gives an estimate of the economic value of the property.

Most real estate valuers also estimate the remaining life of the building based on structural strength of the building design ,materials used and age of the property. In addition most valuers will also check whether the Title of the property is clear and not under any litigation.

To ascertain the value of the property the following factors would have to be considered

Some of these factors that would affect the valuation of a property are mentioned below

The Government of India has tried to make things simpler. It has introduced certain guidelines based on which the property valuation takes place. Now you will have to follow these guidelines if you want to know the official value of the property. Many websites offer you a property valuation calculator, or a property valuation estimator. You have to put the data of the property that is available and you will get to know the original value of the property. Now whether the market forces allow you to buy the property at that rate or not is a different matter altogether.

Government property valuation is important if you are going to apply for a loan based on your property. There you must be aware of the value of your property, as you will get a loan based on it. Other than that, it is the marker forces, which decide at what price can you buy or sell the property.

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