Real Estate Appraisal: a Review of Valuation Methods

8210 WordsSep 15, 201233 Pages
The Emerald Research Register for this journal is available at http://www.emeraldinsight.com/researchregister The current issue and full text archive of this journal is available at http://www.emeraldinsight.com/1463-578X.htm PRACTICE BRIEFING Real estate appraisal: a review of valuation methods School of Electrical and Computer Engineering, National Technical University of Athens, Athens, Greece School of Rural and Surveying Engineering, National Technical University of Athens, Athens, Greece, and Jonathan Edwards Consulting, University of Reading, UK Keywords Market surveys, Real estate, Forecasting, Estimation, Assets valuation Abstract The valuation of real estate is a central tenet for all businesses. Land and property are…show more content…
An investor will view worth as the discounted value of the rental stream produced by the asset, whereas the owner-occupier will see the asset as a factor of production and assign to it a worth derived from the property 's contribution to the profits of the business. No doubt both groups of bidders will also be mindful of its potential resale price to a purchaser from the other group. The concept of the worth of a property is most important in markets that are underdeveloped in terms of liquidity and the separation of ownership and use rights. Here most transactions are based on owner-occupiers ' views of the worth of the property, i.e. the contribution it will make to business profit, as well as subjective issues such as status and feelings of security. Valuers, with hardly any transaction evidence, can only attempt to replicate these calculations of worth in arriving at an estimate of exchange price. One of the paramount concerns of the valuation profession is the need to ensure that information presented to a client is clear and unambiguous. Not only should all parties understand the terminology used, it is also important that the client receives all other information that might be required to make a Practice briefing: rational financial or investment decision. The latter point does not only concern Real estate the semantics of definitions of exchange price (see below), but must also appraisal address the issue of valuation methodology. Given that clients
Open Document