Are you wondering what your property is really worth and which steps are necessary for a reliable valuation? A structured process is not a luxury but the foundation for any well-informed financial decision. This guide will introduce you to the 5 key valuation steps that make the difference between an estimate and an accurate, market-appropriate value.
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The topic briefly and concisely
A structured assessment process in 5 phases is the basis for any well-informed financial decision regarding a property.
The choice of the right standardized valuation method (comparative, income, or cost approach) is crucial for the accuracy of the result.
The final valuation combines objective building data with a current market analysis to determine the realistic market value.
The value of a property is not a fixed figure but the result of a careful process. Without a clear roadmap, you risk losing up to 15% of the potential sale price during negotiations or incurring unnecessarily high taxes in the case of inheritance. A professional valuation always follows a tried-and-tested sequence of steps defined by the Real Estate Valuation Regulation (ImmoWertV). We guide you through these exact 5 phases – from the initial document review to the on-site analysis and finally to deriving the value. This provides you with an objective basis for your strategy and helps you avoid costly mistakes.
Phase 1: Laying the foundation through comprehensive documentation
Every precise property valuation begins long before the viewing at the desk. Comprehensive documentation is the foundation that eliminates up to 90% of all queries in the later process. Missing documents can delay the entire process by several weeks.
For an initial analysis, at least 5 core documents are required. These include a current land register extract (no older than 3 months), the building plans, the living space calculation, the energy certificate, and for condominiums, the declaration of division. Obtaining these documents is the first and most important of the crucial valuation steps. A complete dataset allows the appraiser to fully understand the legal and factual conditions before the actual analysis begins. Without this foundation, any further examination is speculative and inaccurate.
Phase 2: The site visit for assessing the property characteristics
The second phase is the on-site inspection, where the previously analysed plan data is compared with reality. An experienced appraiser examines over 50 individual features, from the building's structure to the degree of modernisation. This step is crucial, as the property's condition can influence its value by up to 30%.
During the viewing, the following points are systematically recorded:
Condition of the building’s structure: Are there any visible defects or damages to the roof, facade, or windows?
Quality of fittings: What materials have been used in bathrooms and kitchens? A high-quality bathroom can increase the value by €5,000.
Energy condition: How up-to-date are the heating system and insulation? This is directly compared with the information in the energy certificate.
Special features: A balcony, garden, or fireplace are value-enhancing factors that contribute at least 2-5% to the valuation.
The results of the on-site inspection form the basis for selecting the appropriate valuation method, as outlined by the Auctoa valuation process. A thorough inspection prevents the overlooking of value-reducing damages or value-enhancing modernisations.
Phase 3: Selection of the standardised evaluation procedure
After data collection and inspection, the methodical derivation of the value follows. The ImmoWertV prescribes three standardised methods that are applied depending on the type of property. Choosing the wrong method can lead to a deviation from the market value of over 20%.
The three main methods are:
Comparative Method: This method is used in 8 out of 10 sales of owner-occupied houses and flats. The value is derived from the actual prices achieved from at least 5-10 comparable, recently sold properties in the neighbourhood.
Income Method: For rented properties, such as apartment buildings or commercial properties, the focus is on the income. Here, the value is calculated from the future expected rental income, management costs, and the land capitalization rate.
Cost Method: This method is used for unique properties for which there are hardly any comparable objects, such as villas or railway stations. It determines the costs for a hypothetical new build and subtracts age-related depreciation.
Often, two methods are also combined to check the plausibility of the result and ensure a robust quality standard for the report. The correct methodology is the core of any professional valuation.
Phase 4: Market analysis to classify the object
No property exists in a vacuum. The provisional value determined in phase 3 must be validated in the context of the current market. A thorough market analysis considers over 20 location-specific factors and can adjust the final market value by 10-15%.
The analysis examines both the macro and micro location. The macro location includes the economic development of the entire region, while the micro location assesses the immediate neighbourhood. This involves checking the infrastructure (doctors, schools, shopping facilities), transport connections and noise pollution. A property in an area with excellent infrastructure can achieve a price up to 25% higher than a comparable property in a simple location. This precise valuation methodology ensures that the value is based not only on the building itself but also on its potential in the market.
Phase 5: Finalising the value and preparing the report
In the final step, all results are combined, and the final market value is determined according to § 194 BauGB. This value is the price most likely to be achieved on a certain key date in the normal course of business. A short report often comprises only 10-15 pages, while a legally binding market value appraisal for inheritance disputes or tax matters quickly exceeds 30 pages.
A complete appraisal documents all previous valuation steps in a comprehensible manner. It includes a detailed description of the object, a justification for the chosen method, and a transparent derivation of the value. Do you need a quick, yet well-founded assessment? The ImmoGPT chat from Auctoa analyses your data and provides you with an initial value estimation within 2 minutes. For a detailed analysis that goes through all 5 phases, a professional appraisal is essential.
Conclusion: A structured process as the key to success
Determining a property's value is a multi-step process where each step builds on the last. From the careful collection of documents to the final market adjustment, adhering to the 5 valuation steps ensures a result that is not only precise but also defensible to third parties such as banks, courts, or tax offices. A methodical approach protects you from poor decisions and safeguards your assets. Do not rely on your gut feeling; instead, depend on a data-driven and transparent process.
evaluation steps
Additional useful links
The Statistical Office (Destatis) offers comprehensive information on construction prices and the property price index in Germany.
On the Statistical Office (Destatis) website, you will find detailed tables and data on house and building land prices in Germany.
Current press releases from the Statistical Office (Destatis) contain relevant data on real estate or the construction industry.
The Wikipedia article provides a general overview of the topic of property valuation in German.
FAQ
How long does the overall evaluation process take?
Depending on the availability of the documents and the complexity of the object, the entire process from commissioning to the final report usually takes between 2 and 4 weeks.
What does a professional property valuation cost?
The costs vary depending on the scope. A brief appraisal starts at around 500 euros, while a comprehensive market value appraisal for legal purposes can cost between 0.5% and 1.5% of the market value, depending on the property value.
Can I evaluate my property myself?
An independent assessment using online tools can provide an initial guide. However, for binding matters such as sale, inheritance, or divorce, an appraisal by a certified expert is required, as only this is recognised by authorities and courts.
What documents are most important for the assessment in the event of inheritance?
In the event of inheritance, a current land register extract, a certificate of inheritance (or a will with an opening protocol), and the energy performance certificate are central. These documents prove ownership and the condition of the property, which is crucial for determining inheritance tax.
What is the difference between market value and fair value?
The terms are often used synonymously. The 'Verkehrswert' is the legally defined term according to § 194 BauGB and refers to the price that could be achieved in ordinary business transactions at a specific point in time. It is the result of a standardised evaluation.
How current do the comparative data need to be for the comparative value method?
For high accuracy, the purchase prices of comparable properties used should ideally be no older than 6 to 12 months in order to accurately reflect the current market dynamics.
