building value


Generally, the most important variables that determine the value of residential buildings are:


See age - vintage

See architecture - style


See condition


See finish


See materials - walls


See structure


See effective area – equivalent area


LAND


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:



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:


ANALYZING A HOUSE SALE TO FIND THE VALUE OF THE BUILDING

SALE PRICE:


250 000
LESS LAND VALUE:
(80 000)
LESS GROUND IMPROVEMENTS: (5 000)
LESS GARAGE:
(4 500)
LESS INCLUSIONS: (3 000)

-------------
BUILDING CARCASS VALUE:
157 500
Divide by the effective area: /200m2 $787.50/m2


ANALYZING A HOUSE SALE TO FIND LAND VALUE

SALE PRICE:
250 000
LESS BUILDING VALUE:
(160 500)
LESS GROUND IMPROVEMENTS:
(5 000)
LESS GARAGE:
(4 500)
LESS INCLUSIONS:
(3 000)

--------------
LAND VALUE:
77 000


See site value

See replacement cost new method

See building value - questions


2