It is highly significant to estimate the value of a property for real estate manager and practitioners. Due to a wide range of endeavours including listing real estate for sale, financing for real estate, investment analysis, property insurance, and taxation of real estate. Most of the people believe that determining the purchase value is the most beneficial application to evaluate real estate. Here is a quick guide to real estate valuation tools and methods:
Real Estate Evaluation Tool
Comparable Approach to Sales
This real estate valuation tool is for comparing similar properties and what it sold for. For example, if 3 to 5 similar two bedroom homes in the same neighbourhood sold for $150,000 to $180,000 then properties around that area would also sale in that range. The appraiser analyses characteristics and features then select a specific value. He or she may use some real estate tools available in the market to estimate the cost of the property by adding costs of recently sold similar properties in the area.
Approach of Cost
This method estimates the cost of building that property today. It estimates the cost of labor and material that it would take to build the home. A real estate valuation tool helps you subtract the loss of value of the building due to its depreciation because the building is no in the same condition as a brand new one would be.
Approach of Income
There is efficient real estate valuation tools that may decide the value based on the income it produces. This is done by calculating the net operating income that may be from rent or operating expenses. The tool selects a capitalization rate that is income multiplier, and these rates are derived from sales data of comparable properties. The estimate comes out by dividing the NOI by capitalization rate.
All the tools mentioned above have different uses, and real estate application developers are always coming up with new and effective ways to estimate property value. A Real Estate valuation tool is a part of determining what the property is worth and plays an important role in the estimation for the home. There are some unique properties, and it becomes harder to find comparable properties for them, so this is when you need an efficient real estate tool to analyse it for you.
Real Estate Daily 