Valuation of property Article Example | Topics and Well Written Essays - 2750 words

Valuation of property - Article ExampleA trustworthy estate appraisal is performed by a licensed or certified appraiser (in many countries known as a property valuer or land valuer and in British slope as a surveyor). If the appraisers opinion is based on Market Value, then it must also be based on the Highest and Best Use of the real property. For mortgage ratings of improved residential property in the US, the appraisal is most often reported on a standardized form, such as the invariant Residential Appraisal Report. Appraisals of more complex property (e.g. -- income producing, raw land) are usually reported in a narrative appraisal report.agents and supplied as helping of the negotiations relating to the sale of the site was seen to contain a serial publication of calculative errors on checking the calculations. The site value provided by the landowners is found to be excessive.Thus, we see that the corrected valuation of the site is closer to 7.5 million pounds and not 8.5 million pounds as suggested by the landowners agents in their appraisal. So their appraisal is found to be faulty and the inherent errors and series of calculative errors are identified and corrected.The significance of a sale of a similar nearby property for 5,000,000 pounds is relatively significant in the appraisal and ca... The respect of interest for a short term housing loan is closer to 13%.Calculative errors This is the appraisal as submitted by the landowners agents which was found to contain a series of calculative errors and inherent flaws.Detailed Residual ValuationDevelopment IncomeShops 800m2 *95%760 * 250m2 190,000Offices 6,750m2 *90%6,075 * two hundredm2 1,215,000Total Income 1,405,000YP in 2 years 7% 14.28 common Development Value 20,063,400Development CostsBuilding CostShops 800m2 * 500m2 284,000Offices 5,400m2 * 850m2 4,590,000Subtotal 4,990,000Ancillary Costs 150,000Subtotal 5,140,000Professional Fees 12.50% 642,500Subtotal 5,782,500Short Term Finance say 12% on total costs for 24 months 2,891,250 *(1.12)2 - 2,891,250 735,533Subtotal 6,518,033Letting Fees 15% of Income 210,750Subtotal 6,518,033Developers Profit, 20% of 5,782,500 1,156,500Total Development Costs 7,674,533Residual Value 12,388,867Site Value on completionSite Value Calculation1.03x (1.12)3 = 1.4512,388,867 / 1.45 8,544,046Corrected CalculationsThis is the alternative more accurate valuation of the site.Detailed Residual ValuationDevelopment IncomeShops 800m2 *95%760 * 250/m2 190,000Offices 6,750m2 *90%6,075 * 200/m2 1,215,000Total Income 1,405,000YP in 2 years 7% 14.28Gross Development Value 20,063,400Development CostsBuilding CostShops 800m2 * 550m2 440,000Offices 5,400m2 * 900m2