How real estate appraisal done in india?

Question

How do professionals estimate the price of a property in India?

Answer 1

There are 3 main ways to value property:

1/ Comparable sales approach i.e. look at the sales of similar properties in the target area to get the weighted average....usually used for residential properties

2/ Replacement cost approach i.e. how much would it cost today to build the same proeprty from the ground up......usually used by insurers.

3/ Income appraoch i.e. take the rental income multiplied by the real estate capitalization rate (yield rate) in that market to come up with "best price/value"...usually used for income producing commercial properties..

Answer 2

there are 3 main methods.

1. Method 1 - Sales Comparison Approach
The sales comparision approach is commonly used in valuing single-family homes and land. Sometimes called the market data approach, it is an estimate of value derived by comparing a property with recently sold properties with similar characteristics. These similar properties are referred to as comparables,and in order to provide a valid comparison, each must:
Be as similar to the subject property as possible;
Have been sold within the last year in an open and competitive market
Have been sold under typical market conditions

Method 2 - Cost Approach
The cost approach can be used to estimate the value of properties that have been improved by one or more buildings. This method involves separate estimates of value for the building(s) and the land, taking into consideration depreciation. The estimates are added together to calculate the value for the entire improved property.
The cost approach for real estate valuation involves five basic steps:
Estimate the value of the land as if it were vacant and available to be put to its highest and best use, using the sales comparison approach since land cannot be depreciated.
Estimate the current cost of constructing the building(s) and site improvements.
Estimate the amount of depreciation of the improvements resulting from deterioration, functional obsolescence or economic obsolescence.
Deduct the depreciation from the estimated construction costs.
Add the estimated value of the land to the depreciated cost of the building(s) and site improvements to determine the total property value.






Method 3 - Income Capitalization Approach
The income approach is the third method of real estate valuation, and is based on the relationship between the rate of return an investor requires and the net incomethat a property produces. It is used to estimate the value of income-producing propertiessuch as apartment complexes, office buildings and shopping centers. Appraisals using the income capitalization approach can be fairly straightforward when the subject property can be expected to have a future income, and when its expenses are predictable and steady.

Answer 3

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