VALUASI NILAI PROPERTI LAHAN

Real property valuation

Valuation is both aScience and an Art!

Metode Valuasi

Teori Valuasi

Terori Nilai

TEORI NILAIPlaton (427 – 347 BC)

- division of labour (specialization) contributes to higher efficiency (The State)

Aristoteles (384 – 322 BC)- on exchange, money, prices and value (Politics and Ethics)

Adam Smith (1723 – 1790)- distinction between Utility value and Exchange value

(An inquiry into the nature and causes of the wealth of nations, 1776)

TEORI NILAIKarl Marx (1818 – 1883)

- connections to Aristoteles and the dis- tinction between utility value and ex-

change value. The latter is a reflection of the labour which is spent on the specific

commodity Marx claimed. (Das Kapital, 1867, 1885, 1894)

Hernando de Soto (1940 - ) - on the causes to wealth differences in the world and why capitalism triumphs in the west but fails everywhere else.

(The Mystery of Capital, 2000)

Background factors:The Swedish Hand-book

Fastighetsvärdering (RealEstate Valuation):

- Utility/Benefit- Scarcity

- Need- Use/disposition

rights- Transfer rights

Teori Nilai

Background factors:The Appraisal of Real EstatePart I, Chapter 2 page 19:

- Utility/Benefit - Scarcity - Desire - Effective purchase power

Teori Nilai

Value theory

Background factors - a summary:

- Utility/Benefit - Scarcity - Desire/Need - Effective purchase power - Use/disposition rights - Transfer rights

- Utility/Benefit- Scarcity- Desire/Need- Effective purchase power

- Use/disposition rights- Transfer rights

The first two factors are related to thesupply side of economy and humanbehaviour, the two next to the demand side of economy and human behaviour

Teori Nilai

• A consequence of:– Valuation factors for real property– Social ideals and standards– Economic activities and trends– Government regulations and activities– Physical or environmental forces– Location factors

• Depends on people´s desires• Depends on future benefits• The value can not be calculated,

it can only be estimated

Teori Nilai

Real property valuation

Valuation is both a Science and an Art!

Valuation includes componentsand knowledge of:

-mathematics-statistics-physical (land) planning

-urban planning-rural planning/agriculture

-building construction-sociology/human behaviour-common sense/feeling

Real property valuation

Literature:

- Handouts

- The Appraisal of Real Estate: Part 1 Fundamentals

Chapter 2 The Nature of Value (pages 19 – 31)

Real property valuation

Valuation is both aScience and an Art!

Valuation Methods

Valuation Theory

Value Theory

Aristoteles (322-284 BC) - subjective utility value

Adam Smith (1723-1790)- utility value, exchange value

David Ricardo (1772-1823)

Thomas Malthus (1766-1834)

Teori Valuasi

Relation between subjective yield valueand market value

Seller Buyer

Seller´s yield value

Buyer´s yield value

Area for presumptive transaction

Classical scholars:-Smith-Ricardo-Malthus Their basic theory was a sort of“price theory” where they empha-sized the influence of productioncosts on the value but where thedemand factor was supressed.

Teori Valuasi

The classical scholars could not suffi-ciently explain many valuation problems and the Neo-classical scholars appeared:Stanley Jevons (1835 - 1882)Leon Walras (1834 - 1910)Alfred Marshall (1842 - 1924)Ernst Laur (1871 - 1964)

The most prominent feature of their ideas were “The margin theory”(Margin utility, margin cost and margin income)The demand component was important for the value, not only the production cost

Teori Valuasi

Modern economists with influence on value theory and valuation theory are:

Frederic Babcock(The Valuation of Real Estate, 1932)

Richard Ratcliff(Modern Real Estate Valuation, Theory and Application, 1968)

Teori Valuasi

• Market value– The most probable price of a property on the open

market– Used in most cases

• Net income value– The present value of future yearly net income – Used e.g. for

- investment decisions- market simulation

• Cost value– Replacement costs minus depreciation– Used e.g. for

- insurance compensation - market simulation

Teori Valuasi

Price = Value = Cost

(The Appraisal of Real Estate, 12th edition, Chapter 2 page

19 -20)

Metode Valuasi

Numberof

transfers

Price

Market value

The most probable price of the property on the open market

Definition of market value (1)

Definisi Nilai Pasar Some key elements:- “ asset”- “ the estimated amount”- “ a property should exchange”- “ on date of valuation”- “ between a willing buyer”- “ a willing seller”- “ in an arm´s-length transaction”- “ after proper marketing”- “ wherein the parties had each acted knowledgeably”- “ and without compulsion”

Metode Valuasi

• Sales comparison approach

• Income capitalisation approach

• Cost approach

When searching for a market value,the income and cost methods are

market simulating methods!

Sales comparison approach

• Identification and selection of real properties purchased in a comparable market area

• Objects are made comparable...• ...and adjusted according to purchase dates (price trends)

or other differencies• Mean price of the selected purchases = estimated market

value

Information needed• Information about the purchase

– Price– Date of sale– Seller– Buyer

• Information about the real property– Land use– Land area– Building: size, age, standard etc.– Other special conditions

Seller: Mr EkBuyer: Mrs AlmDate: 04-09-15Price: 1 200 000etc.

Pendekatan Kapitalisasi Pendapatan

SEK/USD

Year1 2 30 . . . .etc n

Remainingvalue

Yearly netincome

The current value of future yearly net income and remaining value at the end of the calculation period

4 methods: • Sales price / square meter• Sales price coefficient• Gross capitalisation factor• Net capitalisation percent

Pendekatan Kapitalisasi Pendapatan

Information needed

• Information about the real property:–Land use–Land area–Building: size, age, standard

etc.–Yearly costs and incomes–Other special conditions

Pendekatan Biaya

SEK/USD

Age (years)0 10

Depreciation 3.5 %/year

Replacementcosts

Replacement costs 1 000Depreciation 10 years 3,5 % - 350Cost of land 200Cost value 850

Cost of land Costvalue

Informasi yg diperlukan• General information

– Average replacement costs

– Depreciation - time and percent

– Average value of land

• Information about the real property– Land use– Land area– Building: size, age,

standard etc.– Other special conditions

Real property valuation

Notice - a frequent mistake !

Mathematics Statistics

GIS

Economics

Common sense

Others

Land planningSociology

Real property valuationRecommendation - a balanced and appetizing mix !

Mathematics Statistics GIS

Economics

Common sense

Others

Landplanning

Sociology