What is real estate valuation and how is it done? What steps does the real estate valuation process consist of? Which valuation approaches are used during the valuation process? Who can carry out property valuation activities and under what laws? We have put together the answers to all your questions and questions for you.
Valuation means determining the value of a thing or asset based on financial, economic or other criteria.
Various methods and factors are used to determine the value of an asset. Valuation is used in financial markets, real estate, company valuation, investment analysis and many other fields. The value of an asset can depend on many factors, including demand and supply factors, as well as economic conditions, market trends, the value of similar assets, future potential, financial data, and other factors.
The valuation process is usually carried out by experts or valuation companies. In this process, the characteristics of the property or asset are analyzed, market data is examined, financial models are used and valuation reports are created. Valuation results can be used for many purposes, including to guide decision-making processes, negotiate buy-sell transactions, support investment decisions, or be used in financial reporting.
The valuation process is an area that requires an objective and professional approach. This process ensures accurate and reliable valuation results and provides valuable information to interested parties.
Appraisal price is a term that refers to the value of a good or asset, usually a real estate or company.
The valuation price is determined as a result of analyzes and calculations made by an appraiser or appraisal company.
The appraisal price reflects the market value or potential value of the property or company. This price is usually determined by considering factors such as market conditions, the property’s characteristics, location, similar sales or income stream. The appraisal price is used to represent a fair value for a possible sale, lease, mortgage or investment transaction of the real estate or company.
The appraisal price is presented in an appraisal report or appraiser’s opinion. This price arises on the basis of professional analysis and evaluations to determine the value of the good or asset in question. The valuation price is used as a reference in transactions such as sale, lease, mortgage or insurance of an asset.
There are some factors to consider when valuing a property.
These include factors such as the location of the property, its size, land structure, infrastructure status, environmental factors, ease of access, real estate market conditions, nearby facilities and services. In addition, the purpose of use of the property, its future potential, building features and current market demands should also be taken into consideration.
Real estate valuation is the process of independent and impartial evaluation of the value of all kinds of real estate, rights and benefits related to real estate, belonging to all kinds of public and private organizations or real or legal entities, within the framework of the legislation and laws in force, on a certain date using international methods.
Valuation helps determine whether the asset should be sold and determines the investment value of the asset. For an accurate property valuation, experts with experience and knowledge should be selected.
Real estate valuation, which is the process of determining how much a property is actually worth, or the resulting value in property valuation may or may not be the same as the price of the property. Real estate valuation is done based on the income generated from the property, its location and other factors.
Three basic approaches to real estate valuation are used in the world and in Turkey.
1- Market Approach (Comparable Comparison Method): It is the determination of the value of a real estate by comparing it with similar real estate traded in the market.
2- Cost Approach: This approach is based on the principle that the price that a buyer in the market will pay for the appraised real estate will not be more than the cost of an equivalent asset, whether through purchase or construction. Considering the wear and tear and obsolescence of the real estate being valued, the value is reached by deducting the depreciation cost from this cost.
3- Income Approach: In this approach, the value of the real estate is determined based on the present value of the income, cash flows or cost savings created by the real estate.
The real estate sector gaining importance in our country’s economy and the necessity of protecting savers (investors), which is one of the main duties of the Capital Markets Board, brought about the concept of “Real Value”.
Therefore, CMB has pioneered the creation, development and institutionalization of the housing appraisal profession in the field of capital markets and the development of appraisal standards. In order to develop the Board Valuation Sector; It has introduced into our legislation the regulations regarding valuation activities and the licensing principles of companies that will provide valuation services. In addition, the Board aimed to integrate the International Literature and National Legislation by translating the valuation standards published by the International Valuation Standards Council (IVSC) into our language.
In 2001, CMB published “Regulations Concerning Valuation Activities in the Capital Market” and “Communiqué on Companies to Provide Real Estate Appraisal Services within the Framework of Capital Market Legislation and the Principles Regarding the Listing of These Companies by the Board”.
The purpose of these communiqués is to determine the framework in our country’s legislation by whom valuation services can be provided and how and under what conditions valuations will be carried out. Real estate appraisal service in accordance with the legislation; It is carried out by Real Estate Appraisal Experts who are employed full-time within the Real Estate Appraisal Companies licensed by the Board, or who are affiliated with the company through a contract without being employed full-time. Real Estate Appraisers are licensed individuals who have at least a 4-year university degree, have at least 3 years of experience in the field of real estate appraisal, or have successfully completed the necessary professional training.
Real estate feasibility refers to the process of analyzing the economic, financial and technical feasibility of a real estate project.
The feasibility study helps project owners make data-based decisions by evaluating the project’s profitability potential, investment costs, risks and returns. This analysis focuses on land selection, project size and components, market demand, financial forecasts and other factors, ensuring the successful implementation of the project.
The real estate appraisal process begins with the customer/requester submitting the information about the real estate for which expertise is requested. The Real Estate Valuation process works as follows;
1- Signing the contract in which the parties, scope, conditions and valuation service fee for the valuation process to be carried out are determined,
2- Directing the appraisal process to the Appraiser,
3- Researching the records of the asset/immovable property to be valued in relevant institutions (Municipality, Land Registry and Cadastre Directorates, etc.)
4- Inspections carried out on site/locality of the real estate and collection of findings
5- Preparing the valuation report in line with the rules and principles determined by National Legislation and/or International Valuation Standards
6- Delivery of the real estate valuation report to the requester
Valuation, also known as expertise, is usually done by an expert or valuation company and various factors are taken into account. These include the physical characteristics of the real estate, its location, market demand, sales prices of similar real estate, rental income, structural situation, economic factors and legal regulations. Among the valuation methods, comparative method, cost method and income method can be used. Valuation can be done for various purposes such as sale, rental, mortgage security or taxation of real estate.
The parameters used in the real estate valuation process can be listed as follows:
Location: It is an important factor in the valuation spread over the location, such as the region, neighborhood or neighborhood where the property is located. Elements such as access to transportation, infrastructure and landscaping.
Physical Features: Physical features such as the size of the real estate, land features, building age, construction quality, architectural design are taken into account in the valuation.
Market Demand: Realizing variables such as the demand level and potential in the market where the real estate is located, sales or rental data of similar real estate, supply-demand cost.
Income: Income sources such as rental income for commercial real estate, potential rental income for residences, and workplace rents play an important role in valuation.
Tax and Legal Regulations: The tax liability of the real estate, current legal contents and planning protections are taken into account in the valuation.
Economic Factors: General economic factors such as economic growth, interest rates, interest rates are concentrated in the valuation of real estate.
The property valuation process may vary depending on the type of real estate and environmental factors and takes between 2 and 15 business days.
A real estate appraisal report is an official document prepared to determine the value of a real estate.
This report analyzes in detail the market value of the real estate, its features, physical condition, environmental factors and other affecting factors. These reports, prepared by real estate appraisers or valuation companies, are used by various parties such as real estate owners, investors, financial institutions, insurance companies and government institutions. It provides guidance in decision-making processes and financial transactions by providing an accurate valuation of real estate.
The purpose of the real estate valuation report is to analyze the market value and potential return of real estate, provide information to property owners or investors and guide them in their financial decisions.
A real estate valuation report can be used in a number of transactions such as sale, rental, mortgage or insurance of a property. This report is backed by a reliable valuation process and data-driven analysis and is prepared by a professional appraiser or an appraisal company.
The time it takes for the real estate valuation report to be issued depends on several factors and may therefore vary. Generally, it takes an average amount of time to prepare a home appraisal report, depending on the following factors:
Size and Complexity of the Property: The size and complexity of the property can affect the duration of the appraisal process. Larger and more complex properties may require more data collection and analysis, which may increase report preparation time.
Data Access: The access time to data required to prepare the report affects the valuation process. It may take time for the appraiser to access the necessary data and make the correct analysis.
Expert Workload: The appraiser’s current workload may affect the report preparation time. During busy periods or when the expert is busy with other projects, the report may take longer to complete.
Scope of the Report: The scope of the report can also affect preparation time. For example, a special request that requires a more detailed analysis or additional reports may extend the deadline.
Considering these factors, the time it takes to prepare a real estate appraisal report can typically range from a few days to a few weeks. However, these periods may vary, especially on a project-specific basis. It is important to consult with an expert and set a specific time frame for completing the valuation process.
The validity of the real estate valuation report depends on many factors. For a real estate valuation report to be valid, it is important to consider the following elements:
Report Preparation Process: The preparation process of the valuation report should be carried out in accordance with standards and reliable methods should be used. Reports prepared professionally by an expert valuation company or appraiser are considered more valid.
Currentness of Data: The validity of the valuation report is related to the currency of the data used. Market conditions, sales prices of similar real estate, rental rates and other relevant data at the time the report is prepared must be up-to-date.
Analysis and Rational Approach: The report should be prepared on the basis of objective analysis and a sound rational approach. It is important that the appraiser has sufficient knowledge and experience, uses correct appraisal methods and makes the necessary analyses.
Compliance with the Purposes of the Report: The valuation report is prepared for a specific purpose. Whether the report is suitable for its purposes affects its validity. For example, a report for sales purposes may produce different results than a report for rental purposes.
Real estate valuation reports remain valid for a certain period of time. However, changes in market conditions or changes in the physical condition of the real estate or its environment may affect the validity of the report. Therefore, updated data and a new valuation report may be needed.
Banks, public/private institutions and organizations, and real persons may request a real estate valuation report. The transactions that will require real estate valuation can be listed as follows:
1- Determination of the purchase and sale value in case the property changes hands
2- Determination of rental and sales value in rental and leasing transactions
3- Valuation of real estate owned by companies/organizations recorded in accounting records in accordance with International Financial Reporting standards
4- Valuation of real estate in the portfolios of public companies
5- Valuation of real estate in company assets in cases such as company takeover, merger and dissolution
6- Determining the most efficient and best use of real estate for correct investment decisions
7- Insurance Transactions
8- Determination of investment value of Real Estate Projects (Feasibility Studies)
9- Expropriation Procedures (Determination of Expropriation Price)
10- Valuation of real estate in the portfolios of Real Estate Investment Trusts/Funds (REIT-GYF)
11- Guarantee transactions against real estate
12- Auction, liquidation value and scrap value determination.
13- Valuation determination made within the scope of the obligation to prepare reports by organizations and individuals licensed by the CMB regarding Risky Areas and Risky Structures in accordance with the implementation regulation of Law No. 6306 (Urban Transformation Legislation).
The cost of a real estate appraisal report varies depending on various factors. These factors include the size of the property, its complexity, its location, the scope of the report requested, and the service fee policy of the appraisal company or expert.
In general, the cost of a real estate appraisal report varies depending on the characteristics of the property, its market value and the scope of service requested. Costs can often be set as a flat fee or a percentage of the value of the property. Valuation companies or experts typically provide a cost quote by conducting a preliminary inspection and assessing the requested scope of the report.
Real estate valuation report costs can often be thousands of TL or more. This figure may vary depending on the value of the real estate, the scope of the requested service and the pricing policy of the valuation company or expert. To get more precise information about the appraisal process and costs, it is important to contact an appraisal company or expert and submit your requests directly to them.