Comparative value method: Realistically assess property value
The comparative value method is mainly used if there are enough similar properties for the property type in question. Typical examples are freehold flats, undeveloped plots or terraced houses. The more comparable sales cases there are, the more precisely the property value can be determined.
When does the comparative value method make sense?
A large city flat lends itself to this method because there are often similar units with the same layout and furnishings in the same building or in the immediate neighbourhood. If there are not a sufficient number of similar properties, the asset value method is usually the better alternative.
Data basis for the comparison
The comparative value method is based on the purchase price collections of the local expert committee. These contain anonymised information on completed property sales. Using this data, a valuer can draw reliable conclusions about the value of a property.
Another source of information is the standard land value map provided by the expert committees. It shows building utilisation possibilities, property values and price dynamics in different locations. The property value can be further specified by comparing it with such guide values.
Consider surcharges and discounts
In addition to the location and size of the property, individual factors are also included in the calculation. If the property is located on a noisy main road or is exposed to environmental influences, this reduces the value. Conversely, a particularly quiet location or well-kept surroundings can increase the value.
Rented flat vs. property without occupancy
If the flat is rented out and is to be sold as an investment, buyers may have to give notice of cancellation in order to move in themselves. This reduces the attractiveness of the property from the buyer's point of view. Accordingly, experts estimate the value of a rented flat to be around 20 % lower than that of a comparable, unoccupied unit.
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Robert Schüßler
Property valuer (EIA and IHK)
