Generally, the most important variables that determine the value of residential buildings are:
materials of construction
inclusions - see above
ground improvements - see above.
See age - vintage
See architecture - style
See materials - walls
See effective area – equivalent area
Land value is determined using the direct comparison method as shown above or by analyzing the value from sales of houses using the summation method. The main component of land value is whether or not a house can be built on the land. Therefore, the extra or marginal value of land over and above that value is less per square metre than the basic building block.
Factors affecting land value includes:
outlook eg a northerly aspect
inside or corner block
on the high side or low side of the the road.
condition of the road and access to the block.
ANALYZING VALUES WITH THE SUMMATION METHOD
To analyze sales using the summation method, the known parts are substituted in the summation formula to find the unknown part. For example:
A HOUSE SALE TO FIND THE VALUE OF THE BUILDING
|LESS GROUND IMPROVEMENTS:||(5 000)|
|LESS INCLUSIONS:||(3 000)|
|Divide by the effective area: /200m2||$787.50/m2|
A HOUSE SALE TO FIND LAND VALUE
See site value
See replacement cost new method
See building value - questions