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Real Estate Valuation and Basic Evaluation Methods

Real estate valuation is the process of determining the market value of a property and is usually carried out through a valuation report. In this article, we will focus on the main methods of real estate valuation, explaining methods such as market comparison, income approach and cost approach.

 Market Comparison/Equivalent Comparison:

Market comparison is a method of determining the value of a property by comparing the prices of similar properties. The purchase and sale prices of other properties with similar characteristics in the same region are analyzed. The appraiser evaluates this data by considering the characteristics of the real estate.

 Income Approach:

 The income approach determines the value of real estate based on rental income. If there is no property for sale, the rental market in the region is examined. The property is valued using the rental yield and rental multipliers.

Cost Approach:

The cost approach is generally used for detached houses. This method is based on calculating the land and building costs that make up the real estate. The land value is determined from the sale prices of similar land and the probable market value of the real estate is estimated by adding the construction costs.

Appraisers prepare real estate valuation reports using these basic methods. These reports provide property owners, buyers and financial institutions with comprehensive information about the fair market value of real estate and guide their decision-making.

 

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