We offer a brief report that develops an opinion of value based upon the highest and best use of real property. The highest and best use is that use which produces the highest possible value for the property. This use must be profitable and probable. One of three methods are employed for completing valuations.
- Comparable method. Used for most types of property where there is good evidence of previous sales.
- Investment/income method. Used for most commercial (and residential) property that is producing future cash flows through the letting of the property. If the current rental value and the passing income are known, as well as the market-determined equivalent yield, then the property value can be determined by means of a simple model. Note that this method is really a comparison method, since the main variables are determined in the market.
- Development method. Used for properties ripe for development or redevelopment or for bare land only.
Join The Discussion
You must be logged in to post a comment.