Professional building appraisals often use the comparative sales approach if there are a certain number of comparable properties of the type in question. This typically includes condominiums, undeveloped land, and terraced houses.
For a single apartment in a large city, similarly sized and comparably laid-out apartments can sometimes be found in the same building or on the same street. This makes price comparisons easy. If there are not enough similar properties available in terms of location, size, features, age, etc., this method should be avoided and the asset-based valuation method applied.
The purchase price databases of the local valuation committee serve as the basis for a comparative methodology. All notarized real estate transactions are collected and analyzed anonymously.
A reliable valuation is only possible with a sufficiently large number of comparable sales transactions. Alternatively, the land value map, also maintained by the valuation committees, can be consulted. This overview is derived from the purchase price database. It lists, among other things, the permitted building use and the land value in the respective locations within the municipality. Such a comparison can also be used to determine the property value.
Furthermore, the building expert will factor in adjustments during the valuation. If the property is exposed to environmental influences or located on a busy road, these are drawbacks that reduce its value.
It's important to know that the value of a tenanted apartment intended for sale as an investment property is approximately 20 percent lower than that of a vacant one. This is because most prospective buyers are looking for a new home for their own use. If they want to move into a tenanted apartment, they must issue a notice of termination to the current tenants due to personal use. This type of termination is complicated and often lengthy.
Not sure if the comparative valuation method is suitable for your property? We'd be happy to advise you.
Photo: AndreyPopov