Is the value of your property really what you think it is? A misjudgment of just 5% can already cost you €25,000 with a property value of €500,000.
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The topic briefly and concisely
The comparative value method determines the property value based on actual sale prices of similar properties and is legally regulated in the ImmoWertV.
The basis is the purchase price collections of the expert committees, which record every real estate sale in Germany.
Differences between the objects result in adjustments being made to ensure comparability.
This uncertainty affects thousands of owners and heirs every year. An incorrect valuation leads to excessive tax demands or reduced sale proceeds. The solution lies in applying the correct comparison methods based on real market data. This article shows you how the comparative value method, anchored in the Immobilienwertermittlungsverordnung (ImmoWertV), works, which data are crucial and how you can use it for a well-informed strategic decision.
The Foundation: What Distinguishes the Comparative Value Method
The comparative value method is one of three legally standardised procedures for determining market value as regulated in § 15 of the ImmoWertV. Its strength lies in its direct market relation: The value of a property is derived from actual realised purchase prices of comparable objects. This method is primarily used for owner-occupied residential properties such as single-family homes and condominiums, as there often exists a large amount of comparative data. Experts value the procedure for its high accuracy and market relevance. It reflects what buyers are currently willing to pay for a specific type of property in a particular location. For you as an owner or heir, this means a comprehensible and realistic value assessment, recognised by tax offices and banks. The application of this method forms the basis for almost every well-founded valuation methodology.
This data-based foundation is the crucial factor that sets the procedure apart from other methods.
The Data Source: Where the Comparison Values Come From
The quality of the comparative value method is directly dependent on the quality of the data. The most important source is the purchase price collections of the local expert committees. Every property sale in Germany must be notarised, and a copy is sent to these independent bodies. There, the contracts are anonymised and systematically analysed to create a comprehensive database of actual sale prices. This collection contains tens of thousands of records per year in larger federal states alone.
The following data is used for valuation:
Purchase price and sale date
Location of the property (address)
Type of property (e.g., flat, terraced house)
Year of construction and living area
Features and condition
Special legal circumstances
This depth of data enables an accurate market value analysis and the derivation of comparative factors. If there are not enough direct comparable properties, the standard land value comes into play as an aid, which is also determined by the expert committees. Selecting the correct comparable properties is the next critical step in the process.
The Application: Direct and Indirect Comparison Methods
There are two types of application for the comparison value method. The direct comparison is the ideal scenario: A nearly identical neighbouring house was recently sold. In practice, this occurs in less than 5% of cases and is a rarity. Mostly, the indirect comparison value method is used. Here, several similar properties are considered, and their purchase prices are adjusted for relevant differences. For example, a missing balcony can mean a deduction of €5,000, whereas a recent energy-efficient renovation can justify an additional charge of over €15,000.
The adjustment is carried out through a systematic process:
Selection of at least three, ideally up to eight, comparable properties from the purchase price database.
Analysis of value-affecting features (location, size, year of construction, features, condition).
Determination of additions and deductions for each differing feature in euros or percentages.
Calculation of the average value of the adjusted comparison prices.
This average value provides the market value of your property. A careful valuation requires extensive market knowledge. However, even with the best data, the method has its limitations.
Limits of the Method: When the Procedure is Not Suitable
The comparative value method is not universally applicable. The biggest challenge is a lack of comparative data. In very rural regions with few sales or unique properties like listed villas or specialised commercial properties, there is often a lack of sufficient comparables. An appraiser cannot produce a statistically sound valuation using this method in such cases. In these instances, the cost or income approach must be applied. Very volatile market phases with rapid price changes can also limit the validity of sales that occurred more than 6 months ago. In addition, subjective factors not captured in the data can distort the price. These include, for example, particular family circumstances in a sale. A professional quality standard for appraisals ensures that these limits are recognised and alternative methods are correctly applied. However, for most standard properties, it remains the first choice, especially when supported by modern technologies.
Digitisation: How AI is Optimising Comparison Methods
Digitalisation has taken the comparative value method to a new level. While an appraiser might manually analyse perhaps 10 to 20 comparable cases, AI systems can process thousands of data points from hundreds of sources in seconds. Modern algorithms identify complex patterns and connections between features that remain hidden to humans. This enables the impact of micro-locations, such as proximity to a park or a particular school, to be assessed with up to 95% accuracy. This significantly reduces subjectivity and increases the precision of evaluations.
For you as an owner, this means a faster and often more cost-effective evaluation. Instead of waiting weeks for an appraisal, you receive an initial well-founded assessment within minutes. Do you have specific questions about your property? Our ImmoGPT chat can instantly assist you and resolve any uncertainties. A data-driven evaluation using online tools is the first step to a well-founded sales or inheritance strategy. This way, you make a secure and profitable decision in the end.
Conclusion: Data-driven clarity for your property decision
The comparative value method is the most market-oriented and transparent method for valuing residential properties. It provides a realistic market value because it is based on the only factor that truly matters: what buyers are willing to pay. The success of the method depends on the quality and quantity of the available data, as well as an expert analysis of the differences between the properties. A modern, AI-assisted analysis, like the one offered by Auctoa, minimises uncertainties and provides you with a reliable basis in just a few steps. Don't make your decision based on a gut feeling, but on the basis of facts.
comparison methods
Additional useful links
The NWB database offers access to specialist information, which may contain relevant legal foundations and commentaries on property valuation.
On the website of Wüest Partner, you will find comprehensive information about the methods and factors that should be considered when determining property value.
The portal Gesetze im Internet provides the Valuation Law (BewG), which constitutes a fundamental legal basis for valuations, including those of real estate.
FAQ
Why is the comparative value method so important for heirs?
For heirs, an accurate valuation is crucial for calculating inheritance tax and fairly distributing the estate within a community of heirs. The tax office recognises the comparative value method, which provides a solid basis for tax assessment and helps to avoid excessive claims.
Can I conduct the comparative value method myself?
Theoretically yes, but in practice it is difficult. Private individuals do not have access to the detailed and anonymised purchase price collections from the expert committees. Professional tools, such as those from Auctoa, use this data to enable precise and fast analysis.
What happens if there are no comparable objects?
If there are no comparable properties for a property, such as a castle or a factory hall, other standardised methods must be used. In these cases, the cost approach (focusing on construction costs) or the income approach (focusing on rental income) is applied.
How accurate are AI-supported comparison value methods?
Modern AI systems can achieve a very high level of accuracy as they analyze a much larger amount of data than would be possible manually. They identify complex patterns and can weight the value of features more precisely, leading to a more objective and often more accurate assessment.
