Methods of Property Valuation Term Paper Example | Topics and Well Written Essays - 1500 words

Methods of Property Valuation - Term Paper Example The process of estimating values of properties considers numerous elements that might affect the property value. These factors form an essential part of comparable valuing. In determining proper comparable various conditions must be satisfied to ensure the comparable remains closely related to the subject property. The subject property valuation utilizes the value of comparable to determine the estimated property values. Within the property market, various elements affect the selection of a comparable for the subject property. The current market conditions might increase or decrease prices of property depending on the accounting systems employed. According to Rees and Hayward (2001) when selecting a comparable location and physical appearance of the property must display significant similarities. The locations of property might influence the value of the property if the properties under question could both be influenced by location characteristics. The conditions under which comparab les are sold could potentially affect the suitability of a property as a comparable. A property sold understate settlement, for example, might be undervalued following the conditions involved. A proper comparable should be sold under prevailing market conditions and without restrictions on either party. Numerous methods of property valuation exist within the property market. The sales comparison approach remains the most utilized valuation method involving comparables (Betts & Ely, 1998). This method involves a comparison of different units forming the characteristics of the properties under comparison. This consideration of different units creates a beginning point for establishing an estimated value for subject properties. The significant characteristics that could be considered include floor area, property condition, age, and distance from essential amenities, among other property attributes. Though these elements might be considered in the valuation of property, the method relie s heavily on the economic principles of demand and supply.