Property valuation methods

Depending on the situation, a property can be valued in different ways, and as you would expect, this can often result in different numbers being given, which can be confusing for anyone. Knowing how the property is going to be used, even if it has not been built yet, makes a huge difference in what the valuation will be and gives you an idea of what to expect.

The various property valuation methods can include the cost approach, the income method, or the comparable sales method, to name just a few. Some of these are likely to be more useful than others at certain times and places.

The cost approach determines value by taking the cost of the land and the building itself (including the materials and manpower costs involved) to indicate how much the property is worth, although it’s worth pointing out that if the value has changed over time, then this might not always be represented.

The income method looks at how much the property can make over a period of time, which is particularly useful if it is to be rented. This method means you can see how much you will make over time and offset it against the cost of property to determine how much value it has to you, and you can monitor this over the years to come.

The comparable sales method is one of the most common valuation methods and takes into account details such as location, building size and characteristics, history, building regulations, and more. Understanding all of these factors and how they have worked in other properties and sales can help you come to a valuation on similar properties.

Property valuation specialists are able to help advise you on which valuation best suits your situation and intended use of the property, taking into account all the factors that can make a difference. At Roger Hannah, all valuations are undertaken by RICS-registered users, so you can be sure of receiving a fair and impartial valuation at all times.