Real estate valuation using the comparative value method

If you want to determine the value of your property, you can use various methods. One of these is the comparative sales approach. This method is very popular and frequently used because it is considered very accurate and also takes the location in the real estate market into account. However, it is not suitable for all properties!

A property is worth as much as someone is willing to pay for it – at least that's the idea behind the comparative valuation method. This means that the value of a property should be set at the average price achieved when comparable properties are sold recently. This price reflects not only classic valuation factors such as location, features, and age of the property, but also very accurately the current demand.

Which properties are comparable?

The comparative sales approach is used when there are a certain number of comparable properties of the type in question. Since real estate valuation is the bread and butter of professional real estate agents, they know exactly when a property is best valued using this method. Generally, condominiums, undeveloped land, and terraced houses are suitable candidates. For example, in a large city, apartments of comparable size and layout can often be found in the same building or on the same street. In contrast, there are often too few comparable properties in rural areas. If no properties with similar location, size, features, age, etc., can be found, real estate experts recommend determining the property's value using the cost approach instead.

What data is used?

The basis for property valuation using the comparative sales approach is the collection of purchase prices maintained by local valuation committees. These collections gather and analyze all notarized real estate transactions.

To provide a reliable assessment, sufficient comparable real estate transactions are necessary. The land value map can serve as an alternative basis for this. This map is also compiled by the valuation committees and includes, among other things, information on building use and property value in the respective locations within the municipality.

What else is included in the valuation?

Professional real estate agents also factor in premiums and discounts when determining property value. For example, a property located on a busy street will be valued lower than one that is the last house in a quiet cul-de-sac.

Do you want to have your property professionally appraised, but don't know which method is best? Contact us! We'd be happy to advise you.

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https://de.wikipedia.org/wiki/Sachwertverfahren

https://de.wikipedia.org/wiki/Ertragswertverfahren

https://de.wikipedia.org/wiki/Vergleichswertverfahren

Legal notice: This article does not constitute tax or legal advice for any specific case. Please consult a lawyer and/or tax advisor to clarify the facts of your individual situation.

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