Property Value

Definition of Property Valuation and Property Value
The Dictionary of Real Estate, "Act of Estimating process of value"
Assessment is a process of work carried out an appraiser to provide an estimate and opinion (opinion) about the economic value of a property, both tangible and intangible assets based on analysis of objective facts relevant to a particular method, and refers to the principles of assessment applies.

The word "value" can be interpreted as the "meaning" or "sense" (worth) any goods / objects. It has a sense that something good / objects will have value for a person if the item / object is to give the meaning or significance for the individual in question.

The value of a property can also be interpreted as a price paid by a buyer who is able, willing and have the eligibility to purchase from a willing seller, have eligibility, and has the right to sell it. So in this case between the seller and the buyer should know the actual state of the market or both parties have received advice from the professionals who have alhi in the property market.

Value should not be expressed in terms of money (dollar). As an example of a property (eg house), a person may be able to let go and offers 2 his SUV to get home, but on the other hand there is someone else who is willing to offer 3 pieces of his SUV. So it can also be stated that the value is a power / power exchange one thing against another. But since we are now using money as a medium of exchange, then the value will usually be expressed in units of currency.

In its development, the term 'value' is not usually stand alone but together in a more specific terms such as:
- Market Value (Market Value),
- Value To (Use Value),
- Exchange Rates (Value in Exchange) and so on.
Meanwhile, in the field of property valuation terms most commonly used is the 'Market Value' (Market Value).

Important note:
Property valuation is an opinion
Property valuation is an estimate of the value
Performed on a specified date
Is the result of an analysis of relevant market data

The concept of cost, price, and market value
Cost is the amount of money spent on goods or services, or the amount needed to create or produce goods or services. If goods or services are resolved, such costs to be historical fact. The price paid for an item or service to be the cost for buyers.
Cost = cost + materials + wages licensing etc..
Price is the amount of money demanded, offered or paid for goods or services. Price is a historical fact.
Price = Cost + Profit specified by the manufacturer and the market.
The value is an economic concept that refers to the price that is very likely agreed by the buyer and seller of a good or service available for purchase. Value is not a fact, but rather a very probably paid the price for goods or services at any given time according to the specific definition of value.
Price - Cost = Profit (Profit)
Value - Price = Capital Gain

Market Value of Property
Market Value is the estimated amount of money on the valuation date, which can be obtained from the sale or redemption proceeds of a property, the buyer is interested in buying the seller interested in selling, in a non-binding transaction, the marketing done properly, in which the two parties each each acting on its understanding, prudence and without coercion.
Main Principles of Market Value:
Assets can be traded
Having the power to.

Highest and Best Use (Highest and Best Use / hbu)
Hbu defined as the use of the most likely and the optimum of a property, that:
Physically possible, have been considered adequately
Legally permitted
Financially feasible, and
Produces the highest value of the property.
The concept is fundamental hbu of the estimated Market Value
Assessment deep hbu a separate assignment of assessment work.

Assessment Approach
Market Data Approach, approach considers the sales of similar or substitute properties and related market data, and generate an estimated value through the comparison process. The subject property as compared to the comparable market data.
Cost approach, this approach takes into account New Replacement Cost (New Replacement Cost / NRC) minus the depreciation building is added to the cost of buying the land.
Building Market Value = NRC - Depreciation
Land Market Value = Cost of land purchase
Value of Property = Value Value Land + Building
Income Approach, approach is to consider the income and expenses associated with the subject property and the estimated value through the capitalization process.
Value = Net Income / Capitalization Rate

Determinants of Value
Functions that create value are:
V = F (D, U, S, T)

V = Value (Market Value)
D = Demand (Demand)
U = Utility (Benefit)
S = Scarcity (Scarcity)
T = Transtenability (Ease of transfer of rights)