This week we will know, understand and understand the method of comparison in real estate valuations.
And we are especially happy for two basic reasons.
The first is because we started the real estate valuation module at MERIN.
One of the most anticipated and demanded by the students of the degrees in Real Estate Market of the University of Zaragoza.
And secondly, because we are lucky to continue counting to know all the details of real estate valuations with one of the great experts in the country: Jose Luis Polo.
Whose extensive curriculum we invite you to see in any of the previous sessions of the MERIN in which Jose Luis has already participated, such as MERIN: REAL ESTATE VALUATION or THE TREATMENT OF EXCLUSIVES IN THE REAL ESTATE MARKET
But let’s go for the beginning.
Because to learn to value and carry out real estate judicial appraisals, it is necessary to know the regulatory framework in which we are going to move and define the purpose and the different types of valuations that exist and that are:
- Static residual
- Dynamic residual
Once we know the legal framework and the different types of real estate valuations, we will go into systematizing a real estate valuation report.
In which we will have to define the value of the property, its justification and the documentation and information used for its preparation.
Therefore, there are basic concepts that are intrinsic to any real estate valuation such as its value, price or cost, the area of the property and its surroundings, the type of property, the land, its qualification,…
The phases of real estate valuation
To make any real estate valuation we must take into account the different phases that each valuation requires.
In the first place we find the definition of surfaces and taking into account the differences between gross and net and if we are talking about built, useful, registry, cadastral, verified or direct measurement.
It is also very important to define the purpose of real estate valuation.
Because the method used and the techniques usually used condition the results.
As for temporality, we cannot forget that we are facing a market that fluctuates and therefore any real estate valuation has to have a validity period.
And if we want to make a legislative approach in real estate valuation, we can not forget the law of land and urban rehabilitation, the law on the land regime and valuations, the royal decrees that apply to it at the national and regional level, the law of civil procedure and those articles of the criminal code that can be applied.
PREVIOUS WORK AND DOCUMENTATION IN A REAL ESTATE VALUATION
When faced with a real estate valuation, common sense is important.
Even if it seems simple,… that’s the way it is and we will have to use it throughout the process.
In what is the work we call field, we must identify the property to be valued in a way:
- cadastral by means of its cédula.
- the registry, with a simple note or certification.
- Its urban identification, referring to the licenses and the documentation of work in case it is under construction, if it is a protected housing or a listed building.
It is important to reflect that everything seen in this article so far is only an indicative approach to know the content of the session.
And it will be the MERIN students and the guests of the day who will know in detail all the secrets of real estate valuations by the expert José Luis Polo.
The method of comparison in real estate valuation
It allows obtaining the most likely market value of a good, by comparison with the sale prices of similar properties in the same area.
It is probably the most direct and accurate method to obtain market value.
It is a synthetic method and consists of comparison with other farms of the same nature and similar characteristics, whose values and prices are known, being therefore an inductive method, it is not objective; but it can be said to be the least subjective and most objective of real estate valuation methods and to provide the most likely market values.
REQUIREMENTS FOR THE APPLICATION OF THE COMPARISON METHOD
In order to be able to use the comparison method in a real estate valuation, the existence of a representative market for comparable properties is necessary.
But not only this, but to have enough data on transactions or offers, in the area, in order to identify the appropriate parameters to homogenize them.
This implies having sufficient information on at least 6 actual transactions or comparable offers that adequately reflect the current situation of that market.
It is of the utmost importance the identification and inventory of the properties to be valued and the environment and the area where the property object of the valuation is located.
It is also important to correctly identify the building where it is located and the type of property we are valuing.