The art of valuation
15th October 2010
As a property company one of our regular tasks is to evaluate the market value, for either sale or rent, of properties.
This is far from an exact science as at the end of the day something is only worth what someone else is prepared to pay for it, which is not always an known exact number as not everything is worth the same to different people.
Usually we perform "relative valuations" by which I mean we look, for example, at the current market prices of similar units, sales history, how the market is developing, how demand is changing in a given area and how quickly the owner needs to sell.
To come up with a ballpark figure is a relatively easy task, however, it takes real experience to understand the subtleties of the market and what is the correct market price. This difference in experience can often mean the difference of thousands of pounds/euros to investors, so it is important to know if you are getting the best possible advice from your agent.
A deeper question is just what is the "fundamental value" of a property. This is a very difficult, perhaps near impossible, question to answer and is where a view of history and the current world order is of vital importance.
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