At present, the dominant assessment methods are: market parity method , cost reallocation method , income capitalization approach .
1. The market comparison approach
to be appraised its real estate has been traded Area near future similar real estate are compared to those of real estate transaction price correction as a reference to estimate a method under normal market conditions the price and value of real estate. In the real estate market is more mature development of countries and regions, such as Britain, the United States, Japan, Taiwan, Hong Kong and other places, in all types of real estate appraisal is widely used in the market comparison approach. Theoretical basis for market comparison approach of supply and demand on the market. The main departure from the real estate product itself, the use of alternative principle, according to the same market under competitive conditions, with utility, price convergence homogeneous rules that real estate prices equal to the equilibrium price of a similar property on the market equilibrium point.
The use of market comparison approach, requires the presence of more similar real estate transactions. As in some areas of the real estate market is not yet mature, it is difficult to evaluate this approach. Even in the real estate market is relatively developed areas, comparative law may not apply to certain situations, such as for some reason there is no specific area of real estate transactions take place over a longer period of time. Secondly, comparative law needs to be amended in comparison transactions, transaction date, features and other aspects of real estate, some difficult to quantify the use of formulas, often by virtue of their knowledge and experience to judge by the valuers, which affected the valuation of accuracy.
2. The income approach
is the future of real estate is expected to be estimated normal net income, the choice of an appropriate discount rate will revert to its valuation point after the accumulation, in order to estimate the value of real estate prices and methods. The method generally used for operating real estate price estimates, such as shops, restaurants and so on. The income approach is based on the principle expected, both the decision value of real estate, the important factor is not the past but the future factors. Specifically, the value of real estate is usually not based on historical prices, production costs or expected market conditions in the past, second-hand market participants based on their future earnings can be acquired or get satisfaction, fun, etc. Mainly from the user point of view, the use of expected return and the principle of utility value, future earnings will be capitalized, determine real estate prices equal to the discounted value of future benefits acquired and.
The basic idea income approach is straightforward and very easy to understand, but to determine the appropriate reduction of interest rates and the real estate forecast net income in the future is not easy in the calculation. For real estate unproductive real estate or income can not be estimated and can not be implemented using the income method assessment and estimated future earnings also affected the management level of the enterprise. In practice, the reduction rate determined arbitrary large, tends to have a greater impact on the evaluation results.
3. Cost Reset method
is estimated to be the cost of the property constitute analyze strike to be estimated in real estate valuation point of rebuilding price (replacement value or reconstruction price), and depreciation, in order to estimate the real estate objectively reasonable price or value of the method. When evaluating real estate prices, the original value of the house is built, based on the average number of years of depreciation. The cost of real estate assessment method is to estimate the cost per unit of land prices based on the cost of land development, and the development of land, which includes land acquisition and relocation fee, development costs, normal profit and taxation. Costing the theoretical basis for the costs of production theory of value. It is mainly from the developer point of view, the use of the principle of equal amounts of investment to obtain at least the same amount of investment income, according to the general principles of product pricing, determine the price of real estate is equal to the sum of all inputs and capital and profits.
In theory, as long as it is possible to estimate the cost of real estate, you can use the cost method of valuation. However, in real life, the real estate price depends on its effectiveness, rather than the cost it takes; increase in real estate costs do not necessarily increase its value, input costs no more does not necessarily explain the value is not high. In addition, using the cost valuation method is more time-consuming, great difficulty is to calculate depreciation, especially the old real estate appraisers often subjective judgments as the basis, it will also affect the accuracy of the estimate.
Other assessment methods are often derived from these three algorithms.
From the practice of real estate assessment point of view, even in the same real estate, obtained using the three methods assessment is sometimes quite different. In general, the results of the cost assessment method proceeds method results below, the evaluation results market comparison between the two. This is because: cost method from a supply point of view, the income approach is from the perspective of demand, while the market is the law of supply and demand are balanced from the point of view of supply and demand conditions, double the return of the real estate deal to use outweigh or at least cost is equal to the real estate, which is shared by the excess of supply and demand double.