Valuation of Real Property
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Retail Banking and Wealth Management — JAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What is the meaning of 'value' in the context of real property valuation?
Value in real property refers to the present worth of future benefits arising from ownership, expressed in terms of money. It represents what a willing buyer would pay a willing seller under normal market conditions.
What is the 'Investment Method' of property valuation?
It values property by capitalising its annual rental income.
Which method of valuation estimates property value based on the income it can generate?
The Income Capitalisation Method (also called the Investment Method) estimates property value by capitalising the net annual income at an appropriate yield rate. It is used for income-producing properties such as commercial buildings and rented premises.
What does 'built-up area' mean in real estate valuation?
It is the carpet area plus the thickness of outer walls.
What is the Comparative Method of property valuation?
The Comparative Method (or Market Comparison Approach) estimates value by comparing the subject property with recent sales of similar properties in the same locality. Adjustments are made for differences in size, location, condition, and amenities.
What is 'carpet area' in the context of property measurement?
It is the net usable floor area within the apartment walls.
What does the term 'market value' mean in property valuation?
Market value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing. It reflects the most probable price in a competitive open market.
What is 'capitalisation rate' in the income approach to valuation?
It is the rate used to convert income into property value.
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