Valuation of property Article Example | Topics and Well Written Essays - 2750 words

Valuation of property - Article Example A real estate appraisal is performed by a licensed or certified appraiser (in many countries known as a property valuer or land valuer and in British English as a surveyor). If the appraiser's opinion is based on Market Value, then it must also be based on the Highest and Best Use of the real property. For mortgage valuations of improved residential property in the US, the appraisal is most often reported on a standardized form, such as the Uniform Residential Appraisal Report. Appraisals of more complex property (e.g. -- income producing, raw land) are usually reported in a narrative appraisal report. agents and supplied as part of the negotiations relating to the sale of the site was seen to contain a series of calculative errors on checking the calculations. The site value provided by the landowners is found to be 'excessive'. Thus, we see that the corrected valuation of the site is closer to 7.5 million pounds and not 8.5 million pounds as suggested by the landowners' agents in their appraisal. So their appraisal is found to be faulty and the inherent errors and series of calculative errors are identified and corrected. The significance of a sale of a similar nearby property for 5,000,000 pounds is relatively significant in the appraisal and ca... The rate of interest for a short term housing loan is closer to 13%. Calculative errors: This is the appraisal as submitted by the landowners' agents which was found to contain a series of calculative errors and inherent flaws. Detailed Residual Valuation Development Income Shops 800m2 *95% 760 * 250m2 '190,000 Offices 6,750m2 *90% 6,075 * 200m2 '1,215,000 Total Income '1,405,000 YP in 2 years 7% 14.28 Gross Development Value '20,063,400 Development Costs Building Cost Shops 800m2 * '500m2 '284,000 Offices 5,400m2 * '850m2 '4,590,000 Subtotal '4,990,000 Ancillary Costs ' 150,000 Subtotal '5,140,000 Professional Fees 12.50% '642,500 Subtotal '5,782,500 Short Term Finance say 12% on ' total costs for 24 months '2,891,250 *(1.12)^2 - '2,891,250 '735,533 Subtotal '6,518,033 Letting Fees 15% of Income '210,750 Subtotal '6,518,033 Developers Profit, 20% of '5,782,500 '1,156,500 Total Development Costs '7,674,533 Residual Value '12,388,867 Site Value on completion: Site Value Calculation 1.03x (1.12)^3 = 1.45 12,388,867 / 1.45 '8,544,046 Corrected Calculations: This is the alternative 'more accurate' valuation of the site. Detailed Residual Valuation Development Income Shops 800m2 *95% 760 * 250/m2 '190,000 Offices 6,750m2 *90% 6,075 * 200/m2 '1,215,000 Total Income '1,405,000 YP in 2 years 7% 14.28 Gross Development Value '20,063,400 Development Costs Building Cost Shops 800m2 * '550m2 '440,000 Offices 5,400m2 * '900m2