Real estate valuation - why it is so important and how it works

Why a property valuation is essential

A property valuation is important for several reasons:

1. Fair pricing: An accurate valuation is the basis for fair pricing. For buyers, it provides certainty that they are paying the appropriate market price, and for sellers, it ensures that they achieve the highest possible price.
2. Negotiation certainty: With a sound valuation, both buyers and sellers have a solid basis for price negotiations.
3. Financing: Banks and lending institutions require a property valuation to determine the creditworthiness and loan-to-value ratio of the property.
4. Tax aspects: The value of a property also plays a role in the calculation of property tax or inheritance tax.

Common valuation methods

In property valuation, various methods are used to determine the market value of a property. The three best-known methods in Germany are:

1. The comparative value method: This method is particularly popular for residential properties. Here, the value of the property is determined by comparing it with recently sold, similar properties in the surrounding area. The comparative value method is particularly suitable for properties that are easily comparable with other properties due to their location and type of construction.

2. The income capitalization approach: This method is usually used for investment properties, such as apartment buildings or commercial properties. The value of the property is calculated based on the expected rental income. Factors such as management costs and remaining useful life are taken into account to determine the income value.

3. The asset value method: The asset value method is often used for individually designed properties or those where there are no comparable properties. The value of the property is determined by calculating the construction costs and the land value. The asset value method takes into account the substance and construction quality of the building and is particularly common for single-family homes.

Factors influencing the property value

In addition to the valuation method, various factors play a role in determining the property value:

• Location: The location of a property is one of the most important influencing factors. Properties in sought-after locations, such as in city centers or near natural areas, are usually valued higher.
• Condition and furnishings: The structural condition, energy efficiency and furnishings (e.g. high-quality floor coverings, fitted kitchens) also have a major influence on the value.
• Age of construction and useful life: The younger the property and the longer the remaining useful life, the higher the market value will generally be.
• Market development: Supply and demand on the real estate market play a major role. In a "seller's market", where demand is high and supply is scarce, property values rise.

Sources of error in property valuation

Often, owners try to determine the value of their property themselves, which can lead to significant errors. The most common mistakes include:

• Emotional attachment: Owners often tend to value their property higher because they associate personal memories with it.
• Unfamiliarity with valuation methods: Without professional knowledge of valuation methods and current market analyses, it is difficult to carry out an objective valuation.
• Neglecting modernization needs: Defects or necessary renovations are often underestimated, leading to an incorrect assessment of the property value.

Conclusion: Rely on a professional valuation

A professional property valuation offers you security and transparency and protects you from financial risks. It objectively takes into account all relevant factors and enables a realistic assessment of the market value. Especially in a constantly changing real estate market, it is important to use a neutral and well-founded valuation in order to achieve the best possible price or receive a fair offer.

If you are interested in a professional real estate valuation, contact VON POLL IMMOBILIEN Freising with confidence. Our team of experts will be happy to assist you with their extensive experience and market knowledge.