PRIMARY AND SECONDARY METHODS OF VALUATION


Good valuation practice requires that two valuations are made:

- primary or main method
- secondary or check method.

The appropriate methods are shown below:

PRIMARY	SECONDARY
Direct comparison	Summation or capitalization
Summation (depending on the ratios of D and U factors).	Capitalization (depending on the ratios of D and U factors).
Capitalization	Summation or direct comparison.

The secondary valuation method is a check of the primary method. If the result of the secondary valuation is close to that of the primary method then the primary valuation is accepted. If the result of the secondary method is too dissimilar to that of the primary method then the valuation is analyzed to find the reason. The reason may be that the use of the land is not the highest and best use.

The use of two methods will indicate whether or not the land has been uner or over capitalised.