The Valuation of Specialized Property Auctions

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Author: Andrewseo

Andrewseo is an expert author for Property Auctions. He wrote many articles like Property Auctioneers. For more information visit our site www.propertyauctionzone.com/.

For all businesses, the valuation of real estate is an innermost principle. Land and property being one of the factors of production, as with any other asset, the assessment of the land flows from the use to which it is put, and that in turn, is reliant upon the demand and supply for the product that is produced. Overall to sum up with the term valuation and to put it in its simplest form, it is the determination of amount for which the property will handle on a particular date. Nevertheless, there are some extensive ranges of purposes for which valuations are required.

Purpose of valuations: required for different purpose, valuation ranges from open market transaction to enforced purchase. Even though the primary favored method of valuation should not be the dependable source, it is significant that the purpose is determined sooner than undertaking any calculation.

As far as specialized property is concerned they are more of Heterogeneous types than homogeneous to put it very clear, the nature of the property is such that the type of property concerned don’t handle sufficiently to be able to settle on value, by evaluation of previous sales. In such state of affairs, the estimator needs to way out to a valuation model that deals with the core fundamentals of that property so that its value can be determined by reference to the riches producing qualities of the asset.

An accurate estimate of the market price must be produced for any valuation model to have its validity. As a result, the model should be a sign of the market culture and conditions. At the same time, it should be kept in mind that the model should be a depiction of the underlying fundamentals of the market and that the ensuing outline of the valuation is “value”.

There are different types of methods that are used for valuation and each country will have a different culture and experience when it comes to valuation of specialized property and it includes the following like:

1. Comparable method is often used for the property type where there is good verification of previous sales.
2. Investment method; suitable for commercial and residential property that has the potential to produce future cash flows through the letting of the Property Auctions.
3. Accounts method; this method is often used for a specialized property; this method determines an appropriate rent which is then used in the above method (investment method). Where evidence of rent is insignificant while they tend not to be held as investments.
4. Cost method is one of the most significant type used for specialized property and they are used only for properties not bought and sold on the market and for technical purposes only (Accounts and statutory).
5. Residual method this is used for properties ripe for development or redevelopment or for bare land; it determines the value of the asset to the potential sale price of the completed development. This type is used in both specialized and non-specialized property.

Andrewseo is an expert author for Property Auctions. He wrote many articles like UK Property Auctions. For more information visit our site http://www.propertyauctionzone.com/

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