What is a valuation of a property? - Different methods, purpose & factors affecting valuation of a property. ~ PARAM VISIONS

Valuation is a procedure to determine the value of a particular property by using different evaluation methods.

In other words, estimating the value of a property in terms of money, at a present-day rate, allowing suitable depreciation.

The different factors that affect the valuation of property are,

1. Geographical location of the property.

2. Demand & supply of property in a particular locality.

3. Size, area, or dimension of the property.

4. Type of land & construction cost.

5. Age, durability & type of building structure.

6. Improvements or basic amenities provided by government bodies.

7. Infrastructure & easy accessibility to the nearer towns, cities or market places.

8. Future developments or schemes decided by the governing authorities.

The valuation of a property is needed for the following seven purposes.

1. To know the selling price of the property by the owner or seller.

2. To mortgage the property by financial institutions to lend money to the property owner.

3. To know the buying price of the property by a purchaser.

4. To fix the rent or lease value of a particular property.

5. To determine the valuation of a property for taxation purposes by the government bodies or local authorities.

6. The valuation is necessary at the time of acquisition of a property by the government to pay the compensation.

7. Valuation helps to determine the insurance amount & monthly installment for a given time period.

The different methods of valuation are,

1. The rental method of valuation.

2. Valuation based on profit.

3. Direct comparison with the capital value.

4. Depreciation method of valuation.

5. Valuation based on the cost.

6. Book value method of valuation.

7. Development method of property valuation.

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PARAM VISIONS