Are you facing the challenge of determining the value of a property? A well-founded property valuation is often more complex than initially thought. This article provides you with the necessary basics and shows you how to arrive at a realistic assessment.
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The topic briefly and concisely
The property valuation is based on legal foundations (BauGB, ImmoWertV) and uses standardised methods (comparison, income, and cost approaches).
Important factors influencing the value of a property include location, size, layout, buildability, level of development, and soil condition.
The standard land value is an important benchmark, but the actual market value may differ due to individual property characteristics.
Do you know the true value of your land and property? Determining the value of a plot is a crucial step, whether buying, selling, inheriting or for tax purposes. Many owners underestimate the complexity and the numerous factors that contribute to a professional property valuation. This article explains the key principles of property valuation, introduces the common methods, and highlights the crucial influencing factors, enabling you to make informed decisions. Discover how to avoid pitfalls and establish a solid foundation for your property transactions.
Understanding the Fundamentals of Property Valuation
The land value is the monetary assessment of a piece of land, without considering the buildings. It forms the basis for the total value of a property and is crucial for buyers, sellers, and lenders. Accurate knowledge is essential for complying with tax regulations. The legal foundations are primarily anchored in Germany within the Building Code (BauGB) and the Property Valuation Regulation (ImmoWertV). These regulations are intended to ensure that valuations are conducted consistently and in line with the market. The ImmoWertV defines in detail how market valuations should be carried out. For an initial assessment, you can also use our ImmoGPT-Chat. Knowledge of these fundamentals is the first step towards a successful real estate strategy.
Legal Framework: BauGB and ImmoWertV as Guides
The Federal Building Code (BauGB) establishes the general rules for property valuation in sections §§ 192-199. Section 194 BauGB defines the market value as the price that could be achieved under normal business conditions. The Property Valuation Ordinance (ImmoWertV) specifies these guidelines and describes the applicable methods. It regulates the determination of necessary data, such as standard land values and comparison factors. The ImmoWertV came into effect on 1 January 2022, replacing the previous version from 2010. The ImmoWertV is a binding foundation for appraisal committees and experts. A detailed analysis of the valuation standards requires a deep understanding of these regulations. These legal pillars ensure transparency and comparability in property valuation.
When is a professional property valuation essential?
A professional property valuation is not only helpful in many situations but often essential. When buying or selling a property, it ensures fair negotiations and avoids future surprises. Banks generally require a valuation report as security for lending. The property's value is also relevant for tax considerations, such as inheritance or gift tax. Other occasions include:
Divorces for the division of assets.
Estate settlements for the fair distribution of inheritance.
Foreclosures as guidance for bidders.
Accounting purposes under IAS 40 for investment properties.
Determining the insurance value.
An objective assessment by experts provides legal certainty. An initial indication can be obtained through a property valuation report request at Auctoa. The need for a valuation highlights the importance of precise value knowledge.
An overview of the three standardized assessment methods
The ImmoWertV specifies three key valuation methods for determining the market value. The choice of method depends on the type of property and the data available. Often, multiple methods are combined to achieve the most accurate result. These methods are:
The comparative value method (§ 24-26 ImmoWertV): This involves using purchase prices of comparable, recently sold properties. It is particularly suitable for undeveloped land and condominiums.
The income approach (§ 27-34 ImmoWertV): This method is relevant for investment properties, such as apartment blocks or commercial real estate. It is based on the market-typical achievable returns.
The asset value method (§ 35-39 ImmoWertV): It is often applied to owner-occupied properties like single-family homes. This takes into account the building's construction costs and the land value.
Each method has specific strengths and areas of application. A detailed examination of the valuation methodology is essential for understanding. Correct application of these methods is crucial for a valid property valuation.
Influencing Factors: What Really Determines the Value of Your Property
Numerous factors significantly influence the value of a plot of land. The location is one of the most important aspects; proximity to city centres or good transport links increase the value. The size and layout of the property also play a role; larger and well-proportioned plots tend to be more valuable. The degree of development is also crucial, as developed properties incur fewer additional costs. The soil quality, namely the quality of the soil and any potential contamination, can significantly affect the value. The buildability, i.e. what and how much can be built on the property, is another key point. The approved living space that can be realised plays a decisive role. For an accurate identification of valuation factors, expert knowledge is required. These factors must be carefully analysed to arrive at a realistic value.
Understanding the Standard Land Value: An Important Reference Size
The standard land value is an average locational value for the land, expressed in euros per square metre. It is determined by expert committees based on collections of purchase prices and updated at least every two years. In developed areas, the value is assessed as if the land were undeveloped. The standard land value serves as a basis for determining the land value, which results from the standard land value multiplied by the plot size. However, the standard land value is only an average and the actual market value may differ from it. Individual characteristics of the plot, such as shape, orientation, or planting, are not considered in this. A detailed analysis of the standard land values is therefore often necessary. Thus, the standard land value is an important, but not the sole indicator of the property's value.
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Although the terms are often used interchangeably, there is a difference. The land value generally refers to the pure value of the undeveloped land. It is often approximated by the standard land value. The property value can have a broader meaning and may include the total value of the property with all the structures or buildings on it. For undeveloped plots, the terms may be interchangeable. However, for developed properties, the distinction is important because the value of the buildings is determined separately, for instance, using the cost approach. Clear differentiation is crucial for the correct application of valuation methods. For specific cases like a property valuation in inheritance, this distinction is particularly relevant. The exact definition depends on the context of the valuation.
Specific aspects: Building law and contamination assessment
What are the fundamentals of land valuation?
The fundamentals include understanding the legal framework (BauGB, ImmoWertV), the various valuation methods (comparison, income, and depreciated cost methods), and the key influencing factors (e.g., location, size, developability, standard land value).
What role does the ImmoWertV play in land valuation?
The Immobilienwertermittlungsverordnung (ImmoWertV) specifies the requirements of the BauGB and defines in detail how market valuations are to be conducted, which methods are to be used, and how necessary data (e.g., standard land values) are to be determined.
Is the standard land value the same as the market value?
No, the standard land value is an average value for a specific area and serves as a guideline. The market value of an individual plot can differ as it takes into account the unique characteristics of the property.
Can I assess my property myself?
A rough estimate is possible, but for a precise and legally sound valuation, especially for official purposes, a qualified expert or a tool like Auctoa ImmoGPT for an initial indication is recommended.
How does developability affect the land value?
Developability, meaning what and how much can be built on a plot (e.g., according to the zoning plan), is a very important factor. Good developability (e.g., a high permitted floor area) significantly increases the value.
What does a professional land valuation cost?
The costs for a professional land valuation vary depending on the scope, complexity, and type of report. For a quick, AI-supported estimate, you can use Auctoa's ImmoGPT or request a non-binding offer for a detailed valuation.
Additional useful links
The Bundesverwaltung may offer a directory entry for services in the field of real estate valuation.
The Statistische Bundesamt (Destatis) provides comprehensive information on construction prices and real estate price indices.
Here you will find tables from the Statistische Bundesamt (Destatis) on house prices and land prices.
A press release from the Statistische Bundesamt (Destatis) addresses topics related to prices, possibly in the real estate sector.
The BORIS - Bodenrichtwertinformationssystem is the central source of information for soil value benchmarks in Germany.
The Bundesinstitut für Bau-, Stadt- und Raumforschung (BBSR) offers a dashboard for the current real estate market report.
The Bundesfinanzministerium provides an application for the allocation of purchase prices for land plots.
FAQ
What are the basics of property valuation?
The basics include understanding the legal framework (BauGB, ImmoWertV), the various valuation methods (comparative, income, and cost approach), and the key influencing factors (e.g. location, size, buildability, standard land value).
What role does the ImmoWertV play in property valuation?
The Immobilienwertermittlungsverordnung (ImmoWertV) specifies the requirements of the BauGB and provides detailed definitions on how market value assessments are to be conducted, which methods are to be applied, and how necessary data (e.g. standard land values) are to be determined.
Is the standard land value the same as the market value?
No, the standard ground value is an average for a specific area and serves as a guideline. The market value (market price) of an individual plot may differ from it, as it takes into account the individual characteristics of the property.
Can I evaluate my property myself?
A rough estimate is possible, but for an accurate and legally secure assessment, especially for official occasions, it is advisable to consult a qualified expert or use a tool like the Auctoa ImmoGPT for an initial indication.
How does buildability affect the property's value?
The buildability, in other words, what and how much can be constructed on a plot (e.g., according to the development plan), is a very important factor. Good buildability (e.g., a high allowable floor area) significantly increases the value.
What does a professional property valuation cost?
The costs for a professional property valuation vary depending on the scope, complexity, and type of report. For a quick, AI-assisted assessment, you can use Auctoa's ImmoGPT or request a non-binding quote for a detailed valuation.
