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An expert assessment is crucial to determine the real value of a property and make informed decisions when buying, selling, or financing. This can optimise the sale price by up to 5%.
Laws and standards such as the ImmoWertV and the BewG standardise the valuation process, but the expertise of a surveyor is essential to consider individual specifics and ensure objectivity.
The digitalisation and use of AI are revolutionising valuation, enabling faster and more precise assessments and contributing to increased efficiency, while human expertise remains indispensable.
Fundamentals for Informed Valuations
The expert valuation of real estate is a complex process that goes far beyond merely determining a price. It is essential to understand the difference between value and price. Price is an objective measure observable in the market, while value is initially subjective and requires objectification to serve as a useful metric. This discrepancy is particularly pertinent in inefficient capital markets, where the price and value of assets such as company shares may diverge. The valuation aims to bridge this gap and create a sound basis for decision-making. An accurate market valuation is thus indispensable to ensure realistic assessments. More information on valuation can be found here.
Diverse Applications of Valuation
The applications of valuation are diverse, ranging from asset assessment and tax purposes to expropriation procedures and loan securities. In matters of inheritance, expert valuation plays a crucial role. It is used to determine the beginning and end of assets, which is particularly relevant for calculating capital gains. An accurate market value determination is thus crucial in numerous situations. Our analysis on the right appraisal strategy offers further insights into the importance of valuations. The objectivity of valuation is of utmost importance to achieve fair and comprehensible results.
Immobilienwertermittlungsverordnung (ImmoWertV): Standard für Deutschland
The Immobilienwertermittlungsverordnung (ImmoWertV) standardises property valuation in Germany to ensure objectivity. It defines the market value according to section 194 of the Federal Building Code and prescribes specific valuation methods, including the cost approach, the income approach, and the comparative approach. The legal and factual circumstances of the property are considered, while unusual or personal circumstances are disregarded. The committees of experts in the federal states play an important role in implementing the ImmoWertV. Our discussions on ensuring accuracy through comprehensive factor analysis complement this topic.
Bewertungsgesetz (BewG): Framework for Tax Valuations
The Bewertungsgesetz (BewG) provides the framework for tax valuations and sets various valuation standards such as the market value, the partial value, the income value, and the liquidation value. The choice of standard depends on the asset and the tax context, such as inheritance tax or income tax. It is important to note that specific tax laws may take precedence over the provisions of the BewG. The official page of the Federal Ministry of Finance offers further information, although access may be restricted due to security measures. Knowledge of the Bewertungsgesetz is essential for correct valuation.
Commercial Law Valuation (HGB): Prudence Principle and Individual Assessment
The Handelsgesetzbuch (HGB) mandates the individual and conservative assessment of assets and liabilities. The acquisition costs or production costs, less depreciation, form the upper limit. The principle of prudence requires the consideration of foreseeable losses and risks. The valuation directly impacts the annual net profit. This is particularly important for companies holding properties as fixed assets. Compliance with commercial law regulations is crucial for accurate accounting. The success strategies in valuation help meet these requirements.
Definition and Meaning of the Mortgage Lending Value
The mortgage lending value is a conservative valuation used by credit institutions for risk assessment in property financing. It represents a long-term viable value that is less susceptible to market fluctuations. In comparison to the market value, the mortgage lending value includes a safety margin to account for potential devaluation. It serves as the basis for the maximum loan amount and is therefore a crucial factor in property financing. The VR Banks information provides further insights into the significance of the mortgage lending value. Thus, the determination of the mortgage lending value is a central aspect of property financing.
Methods of Calculating the Mortgage Lending Value
Credit institutions primarily use the cost approach and the income approach for calculating the mortgage lending value. The comparison approach is additionally employed. The choice of method depends on the property type, distinguishing between own use and investment. The mortgage lending value is generally lower than the market value because it includes a safety margin. The exact calculation method is crucial for the amount of credit a borrower can receive. Therefore, a professional expert assessment is essential. Auctoa Property Services offer professional assistance in this area.
Loan-to-Value Ratio and Mortgage Lending Limit
The mortgage lending limit defines the maximum percentage of the mortgage lending value that can be financed. The loan-to-value ratio is the relationship between the loan amount and the mortgage lending value. A lower loan-to-value ratio leads to more favourable interest rates as it poses a lower risk for the bank. The mortgage lending limit and the loan-to-value ratio are thus important factors that influence the conditions of property financing. A higher equity ratio generally results in better terms. The Haufe information provides further details on this topic.
The Role of Subjectivity in Property Valuation
Although valuation is based on standardized procedures, subjectivity plays a role that should not be underestimated. The value of a property is not purely a mathematical figure but is also influenced by individual assessments and market conditions. This is evident in the typical valuation range of ±20% for properties. Different appraisers can therefore arrive at different results. It is important to be aware of the limits of objectivity and to critically question the results. Auctoa Strategic Consultancy assists you in mastering these challenges.
Standardisation for Objectification
To increase objectivity in valuation, standardized procedures like the ImmoWertV are used. This regulation sets clear guidelines for property valuation and aims to ensure that all appraisers apply the same criteria. The importance of independent experts is to ensure a neutral and unbiased assessment. By adhering to standards and employing experienced experts, subjectivity can be minimized, and a reliable valuation can be achieved. Auctoa Legal Consultancy supports you in adhering to the legal framework.
Expert Obligation under Certain Circumstances
Under certain legal conditions, the appointment of an independent expert for valuation is mandatory. This is the case, for example, when a guardian needs to have assets appraised. The Capital Requirements Regulation (CRR) also mandates independent valuations for mortgage lending valuation. The expert obligation is intended to ensure the objectivity and neutrality of the appraisal. The Munich Chamber of Commerce and Industry (IHK München) provides information about experts and their responsibilities. Appointing a qualified expert is therefore an important step towards a reliable expert appraisal.
The Importance of Expert Independence
The independence of experts is crucial to produce objective and neutral reports. Conflicts of interest must be avoided to ensure an unbiased evaluation. Therefore, experts should not have personal or financial relationships with the parties affected by the valuation. This is the only way to ensure that the appraisal is based on sound facts and independent analysis. The importance of precise valuations is highlighted by the independence of experts.
Standardisation of Terminology in Valuation
A glossary of value and cost terms serves to standardise terminology in valuation. It ensures clarity and consistency in reports and legal contexts. The glossary covers various specialist fields, including garden and landscape architecture, household goods/art/jewellery, real estate, IT and electronics, vehicles, agriculture and forestry, machinery, businesses, and damage to buildings and construction. The IHK München provides a comprehensive glossary on this topic. A uniform terminology is essential for a comprehensible and traceable expert assessment.
Structuring of Definitions
The definitions in a glossary are divided into value terms, cost terms, allowances, and legal terms. The value terms are explained in detail with valuation purpose and SV-practice. This allows precise application of the terms in practice. A glossary helps to avoid misunderstandings and improve the quality of valuation. Knowledge of the relevant terms benefits all parties involved. Auctoa Real Estate Services value clear and understandable communication.
Digitalisation and Automation in Valuation
Digitalisation and automation are making their way into valuation. Software and algorithms are being employed to aid in assessments. Big Data and market data analysis enable a more comprehensive and precise analysis. Automating processes can enhance efficiency and reduce costs. However, it is important to recognise the limits of automation and critically evaluate the results. The significance of precise valuations is emphasised by the use of modern technologies.
Sustainability and ESG Criteria in Valuation
Sustainability and ESG criteria (Environmental, Social, Governance) are becoming increasingly important in valuation. Ecological and social aspects are considered in the assessment. Green Building certifications impact the value of a property. Investors are increasingly placing importance on sustainable real estate. Considering ESG criteria can enhance a property's value and increase its appeal. Auctoa Strategy Consulting supports you in integrating sustainability aspects.
The Role of Artificial Intelligence (AI) in Valuation
Artificial Intelligence (AI) has the potential to fundamentally alter valuation. Automated data evaluation and forecasting models enable faster and more accurate assessments. AI can analyse large volumes of data and identify patterns that are difficult for humans to detect. However, it is essential to consider the limitations of AI and critically assess the outcomes. Human expertise remains indispensable. Ensuring accuracy through comprehensive factor analysis is crucial even in AI-supported valuations.
Summary of Key Findings
The valuation forms the basis for rational decisions in the real estate sector. The expertise and experience of valuers are of great importance. An accurate and objective appraisal is essential for purchasing, selling, financing, and taxing properties. The continuous development of methods and technologies contributes to improving the quality of valuation. Adapting to changing market conditions and regulatory requirements is critical for a future-proof appraisal. Auctoa Real Estate Services offers you professional support on all questions of valuation.
Outlook on the Future of Valuation
The future of valuation will be shaped by digitisation, automation, and artificial intelligence. New technologies enable faster and more precise appraisals. Considering sustainability aspects is becoming increasingly important. However, the expertise of valuers remains indispensable to critically evaluate the results and consider the unique characteristics of a property. Handelsblatt information offers further insights into the future of valuation.
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Key Benefits of Expert Valuation
Here are some of the key benefits you'll gain:
Precise Valuation: Obtain an accurate assessment of your property's market value.
Risk Minimization: Reduce financial risks associated with property transactions.
Optimal Financing: Secure the best possible terms for your real estate financing.
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The Gutachterausschüsse in Baden-Württemberg provide information on property valuation and the tasks of the appraisal committees.
The Federal Ministry of Finance offers information on the Valuation Law (BewG), which sets the framework for tax valuations (access might be restricted).
The VR Banks provide information about the mortgage lending value and its importance in real estate financing.
Haufe offers detailed information on the mortgage lending value and the lending limits in real estate financing.
The IHK Munich offers information on experts, valuation terms, and cost terms in the context of real estate valuation.
Handelsblatt provides insights into the future of property valuation.
What is the difference between the value and price of a property?
The price is the observable amount in the market for which a property is sold. The value, however, is a subjective assessment that is made objective through an expert valuation to create a sound basis for decisions.
Why is an expert valuation important if the ImmoWertV standardises the valuation?
Although the ImmoWertV standardises the valuation, an expert valuation takes into account individual characteristics of the property and market that go beyond standard procedures. This results in a more accurate and realistic valuation.
What is the mortgage lending value and how does it differ from the market value?
The mortgage lending value is a conservative valuation used by lenders to assess risk. It is typically lower than the market value as it includes a safety discount for potential market fluctuations.
What role does subjectivity play in property valuation?
Even though standard procedures are used, subjectivity plays a role, as individual assessments and market conditions influence the value. An expert valuation minimises this subjectivity through thorough analysis and experience.
Under what circumstances is it mandatory to appoint a surveyor for valuation?
Appointing a surveyor is mandatory under certain legal conditions, e.g. when a guardian must assess assets or when the Capital Requirements Regulation (CRR) requires an independent valuation for mortgage lending valuation.
What benefits do digitalisation and AI offer in valuation?
Digitalisation and AI enable faster and more precise analysis of large data volumes, leading to more efficient and informed valuation. They can automate processes and reduce costs.
How do sustainability and ESG criteria impact the value of a property?
Sustainability and ESG criteria are becoming increasingly important in valuation as investors place more emphasis on ecological and social aspects. Green Building certifications can enhance a property's value.
What is the market adjustment factor and how is it applied?
The market adjustment factor (market surcharge or discount) considers the current regional market situation to adjust values determined by specific methods to the market value. It accounts for regional factors when adjusting prices.
