- The value of real estate is constituted by:
+ Value of land
+ Value of buildings, structures, and assets attached to the land
+ Value of other advantages created by the exploitation and business of real estate (in the most effective terms) (determined in the value of the land)
- Valuation purpose
+ Reference market value;
+ Negotiating the value of buying/selling, transferring;
+ Contribute capital to enterprises, contribute investment capital, cooperate in investment, mobilize investment capital
+ Proof of financial capacity;
+ Mortgage loans;
+ Determining business value;
+ Determination of compensation value upon site recovery and clearance;
+ Determining the starting value when organizing an asset auction;
+ Determining the sale and liquidation value of assets;
+ Determination of recoverable value when demolishing or demolishing for investment in new construction;
+ Perform financial obligations to the State according to regulations…
- Valuation method
+ Approach from the market: Comparative method
+ Approach from cost: Renewable cost method; Alternative cost method
+ Approach from income: Discounted cash flow method; Direct capitalization method
+ The mixed approach is built on the basis of combining the market approach, the cost approach and the income approach: Surplus method; Extraction method
Factors affecting the value of real estate:
- Location includes factors such as infrastructure, security, environment, traffic, landscape and feng shui. The evaluation content of each element is:
+ Infrastructure elements include technical infrastructure (electricity, water supply and drainage, fiber optic cable, cable television, telephone, power substations, types of roads, etc.) and social infrastructure (parks, schools, etc.) , hospitals, clinics, markets, post offices, cultural houses, stadiums, gymnasiums, cultural and religious works, etc.)
+ The security factor is assessed through: The level of safety of the surrounding residents; The presence of civil defense posts; Is there a sidewalk lighting system? The terrain is dead-end or pine…
+ Environmental factors are considered through criteria of noise pollution, dust, smoke, light from opposite advertising means, distance to telephone, radio and television broadcasting and receiving stations. , pollution from garbage, flooding...
+ Is the traffic factor observed on the criteria of the type of traffic (2-way or 1-way), is there a separator or not? The distance from the real estate to the main traffic axis, the lane of the alley…
+ Landscape elements: River direction, lake direction, sea direction, forest direction, park direction, mountain direction, hill direction or street direction; Wide or narrow visibility (for high-rise buildings)
+ Elements of feng shui, custom: This factor is very rich and varied depending on the regional market such as whether the land plot has a bottom?
- The group of physical factors includes shape, size, architecture and construction, with the following evaluation contents:
+ Shape factor: Is it square? Is there a balance? Is it standard or close to the norm?
+ Size factor: Land area; Floor area of building; Area of yard, area of garden or arable land.
+ Architectural and construction elements: What kind of architecture? (Number of basements, ground floors, floors, roofs; flat or tiled roofs); Which style? is it common?; Build according to what structure? (reinforced concrete, iron, wood or brick); Time used (age of works).
- Group of economic factors including potential benefits, business advantages and property rights:
+ Potential benefit factor: The benefits will bring to the owner in the future, such as connected roads, more complete infrastructure or better business conditions...; Will be converted to land use purpose…
+ Business advantage factors: Distance to commercial centers, markets, service areas...; Road width; Width adjacent to road frontage; Residential density; Sidewalk width…
+ Elements of property rights: Legal status (certificate of land use rights, house ownership, land allocation decision, design documents, drawings...); Land use factor; Permissible elevation; Time limit for land allocation; Is it possible to change the land use purpose?
- Group of factors related to the exploitation and use
This group of factors includes the following contents: Functions of real estate (residential, office, shop, warehouse...); Existing facilities (elevator, garden, swimming pool, library, gym...); Level of interior decoration (materials and supplies, sanitary equipment, electricity, stove, lights...); Sidewalk width
- Group of non-real estate factors including value of attached movables, policies and intangible values (if any)
+ Policy (tax, land use levy, planning, credit, administrative procedures)
+ The intangible value factor can be the plot of land with the best location in the project, or associated with a certain event or the house that used to be the residence of a famous person...
The qualitative factors account for a large number of the quantitative factors. Therefore, quantifying how qualitative factors affect the value of real estate is meaningful in estimating real estate value. The impact of these factors is based on experience, professional qualifications and professional ethics of the performer.
- The group of location factors usually has the highest level of impact, so in the process of impact assessment, it is necessary to fully analyze, to have reliable data on real estate to estimate value.
- The full identification of factors affecting real estate value is an important basis for estimating real estate value more accurately, scientifically and professionally.