Calculating the market value of a property: how it works
How is a property’s market value calculated? And what role does it play in the sale of a property? Find out what you need to know about market value here.
15.05.2025
iStock / brittak
1. What is the market value of a property?
The market value is the estimated price of a property. The market value estimate is determined by a property valuation.
The market value is based mainly on the land and building value combined. In most cases, the land price is key. In low-tax regions with a high demand for property, the land price is usually significantly higher than in less attractive regions. This means that properties in attractive regions (e.g. with low taxes or close to cities) are considerably more expensive than comparable properties in less attractive regions. You can find other factors that influence the market value here.
2. Why is it necessary to estimate the market value?
The market value forms the basis for determining the selling price of a property. Do you wish to sell your property? If so, establishing the market value will help you avoid pricing your home too high or too low when you put it on the market. The market value is also decisive in calculating the loan-to-value ratio when taking out a mortgage.
How much does a market value estimate cost?
The cost of determining the market value varies depending on the valuation method, provider, size of the property and complexity. Online valuations by specialist companies usually cost between 300 and 600 francs. You should expect to pay at least 1,000 francs for a professional appraisal carried out on site.
Property appraisal as a starting point
Would you like to get an initial idea of the market price of your property free of charge? The free Comparis property calculator is a good place to start.
3. What valuation methods are used?
There are three main methods of valuation for property:
Intrinsic value method (also known as the real value method): focuses on the land value and the current value of the building. The intrinsic value method is usually used for properties with special characteristics (e.g. luxury or aficionado properties).
The hedonic pricing method is a reliable statistical technique and is particularly suitable for standard owner-occupied properties. Hedonic pricing determines the value of the property on the basis of prices actually paid for similar properties. Banks and estate agents usually use hedonic pricing models as they produce valuations that reflect market conditions.
The capitalized income method is used to value investment properties (e.g. apartment buildings). It calculates the value of a property based on the expected net rental income.
4. How can I calculate the market value of a property?
Calculate market value using online tools
As a property owner, you can calculate the value of your property free of charge using online tools such as the Comparis property valuation tool. The valuation is based on factors such as location, living space, year of construction and the condition of the property.
This type of valuation tool provides a rough estimate and the basis for a more in-depth appraisal by an expert.
Establish the market value using estate agent estimates
Professional estate agents are familiar with the market and can use hedonic pricing methods to produce a valuation that reflects market conditions.
Establish the market value using an expert
Homeowners often over-estimate the value of their property. Professional appraisers have the necessary expertise to value factors such as the location, condition and any special features of the property appropriately. This method offers the highest level of accuracy and is particularly advisable when important decisions such as a sale or divorce are involved.
For a professional valuation by an expert, you usually need the following documents:
Current land register extract
Building plans
Building regulations and zoning plan
Information on living and utility space, year of construction, condition and amenities of the property
Images and building description
For condominiums: deed establishing the condominium, usage and administrative regulations, minutes of the last condominium owners’ meetings, and ancillary cost statements
For rented properties: tenancy agreements, rental statements and ongoing maintenance costs
Depending on the type of property and individual circumstances, additional documents such as an extract from the register of contaminated sites, proof of renovations or special agreements may be required. The appraisal expert will let you know.
5. Is the market value the same as the selling price?
The selling price actually achieved for a house or apartment does not have to match the market value. The market value is an objectively determined estimate of the value of a property, taking into account all relevant factors. It indicates the price at which a property can be expected to sell “under normal circumstances”. The value provides a reference and a basis for negotiating the price, but it doesn’t represent a binding selling price.
The actual selling price depends mainly on supply and demand in the market and individual negotiations between the buyer and seller. The selling price can lie above or below the market value – depending on how many interested parties there are and how attractive the property is on the market.
Good to know
The market value is not only relevant for the sale of the property, but also for calculating the mortgage. Financial institutions use the market value as the basis for determining the maximum loan amount. If you buy a property above the market value, you’ll need to cover the difference between the purchase price and the market value with your own funds (equity). From the buyer’s point of view, it is therefore advisable not to buy a property above its market value.
6. What factors affect the market value?
The value of a property is influenced by various factors. Besides the land price, they include:
Location and surrounding area of the property
View
Sunlight
Noise
Access
Age and general condition of the property
Standard of renovation and energy efficiency
Heating
Building structure
Need for renovation
Property size and fixtures, fittings and amenities
Floor plan
Surrounding area
Features such as garage, balcony and lift
The commune and region in which the property is located
Attractiveness of the region
Transport connections (e.g. public transport network and motorway connections)
Shops and proximity to schools or nurseries
Current level of demand in the area
Macroeconomic influences
The current interest rates also influence the market value. With low interest rates and a strong economy, the demand for property is higher. This can lead to an increase in market value – especially in sought-after regions. Conversely, higher interest rates can reduce the market value.
This article was first published on 17.03.2020
