Property valuation is often needed when you are purchasing a property, getting a mortgage loan from a lending institution, determining the estate duty/ stamp duty amount etc. It is a licensed property valuer’s opinion of the open market value of a property. This opinion of market value is based on the subject property’s highest and best use.
In Singapore, a property is said to have highest and best use when its usage is congruent with its latest master plan zoning and plot ratio.
The phrase “open market value” means the best price at which an interest in a property might reasonably be expected to be sold at the date of valuation assuming:
- a willing buyer;
- a reasonable period within which to negotiate the sale, taking into account the nature of the property and the state of the market;
- values remain static throughout the period;
- the property is freely exposed to the market; and
- no account is to be taken of an additional bid by buyer with a special interest.
Basically there are three methods a property valuer used to form his/her opinion and they are Sales Comparison Method, The Income Method, and Cost Method. A second method is used to counter check the market value arrived.
Out of the 3 methods of property valuation mentioned above, the Sales Comparison Method is the most commonly used in Singapore. In this method, sales of comparable properties in the near vicinity are considered and adjustments are made for differences such location, condition of the properties, floor and/or land area of the properties, date of transactions etc.
The Income Method is used to determine the market value of an income producing property. The market value is determined by capitalizing the net annual rental income of a property at a certain capitalization rate.
The Cost Method is used to determine the market value of a non-income producing property such as temples, churches and homes etc. In this method, market value of the property is the summation of the cost of constructing a similar building after deducting depreciation and the value of the land it sits on.
The video below briefly explained the methods used in property valuation (in American context).
Pioneer Property Consultants LLP, a company that focus on providing Property Valuation Services in Singapore, consists of a team of qualified and licensed valuers. With more than 10 years of experience in property valuation, we are committed to provide sound and independent property valuations promptly and accurately. We have the expertise and experience to provide property valuations for all types of properties in Singapore: residential, industrial, commercial, development land, as well as special properties such as nursing homes, religious buildings, petrol stations and agricultural land etc.
We always keep ourselves abreast of the latest technology in relation to property valuation, latest market development and property market news
We provide property valuation services for companies and individuals for the purposes of Sales (HDB flats and all other types of properties), Estate Duties, Stamp Duties, Internal Transfer of Name and Company’s accounts reporting etc.
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