Calculating property value: what is my home worth?

2. What method is used to calculate the property value?

Different valuation methods are used depending on the purpose and type of property. Specifically, the following three methods are often used:

• Hedonic pricing method: in this model, a property’s value is determined by comparing it to similar properties that have been sold. This is how the market value is derived for the hedonic estimate. This model is mainly suitable for standard types of owner-occupied property.

• Capitalized income method / discounted cash flow method (DCF method): both methods are used to determine the value of investment properties. In this method, the future rental income is added up and a capitalization rate is applied for a given valuation date.

• Intrinsic value method: the property’s overall value is based on the value of the land and the current value of the building on that land. The intrinsic value method does not take into account market criteria (except for land value). The intrinsic value may therefore differ from the market value. The intrinsic value method is often used for luxury properties, for example.

3. When is it a good idea to get a valuation?

For luxury properties, properties in need of renovation, properties with a high proportion of land, unique properties or historic buildings, it is advisable to work with a property expert to estimate the property’s value. In addition to the estimated value, the resulting written valuation also reflects the property’s structural condition.

4. What are the advantages of professional valuations?

Sellers often assess the current market situation inaccurately. For example: having to walk 15 minutes to the nearest bus stop has become part of your everyday life. For potential buyers, this may be an argument against the purchase.

This results in price expectations that aren’t in line with the market. Setting too high a price can unnecessarily prolong the selling process. If you set your price too low, you may end up giving money away. With this in mind, it may be a good idea to consult an expert for property valuation.