Market Value Estimates in NJ

As a part of our valuation services at Value Research Group, we perform market value estimates for your property. Market value is:

The most probable price which a property should bring in a competitive and open market under all conditions requisite to fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

  1. Buyer and seller are typically motivated;
  2. Both parties are well informed or well advised, and acting in what they consider their best interests;
  3. A reasonable time is allowed for exposure in the open market;
  4. Payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and
  5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. [1]

Any meaningful appraisal will start by identifying the valuation problem to be solved. It is essential to identify the client, the intended users of the appraisal report and the intended use of the report (financing, tax appeal, transaction support, etc.). We then analyze the subject market factors including demographic and income trends, supply and demand balances and other general characteristics of the subject neighborhood.

Next we analyze subject property data such as applicable zoning regulations, locational features, transportation linkages and site accessibility. All of this data is used to identify a property’s highest and best use as if vacant or as improved. Finally, we apply one or all of the methods of valuation: the Cost Approach, Sales Comparison Approach and Income Capitalization Approach. Market data and expert analysis combine to provide you with a reliable indication of your property’s market value.

 

Determining Fair Market Value

Our appraisers work to accurately determine the market value of the real estate. We’ll estimate the most probable price at which the property would sell for in a competitive market based on the features and benefits of that property, the overall real estate market, supply and demand, and what other similar properties have sold for in the same condition. There are three general methods we use to determine the market value:

 

1. Sales Comparison

The sales comparison approach is a competitive market analysis that compares the subject property to similar properties that were recently sold. Key characteristics to compare include location, physical features, condition of the property, construction quality, number of rooms, size, floor plans, financing, and sale prices within the last six months.

 

2. Cost Approach

In the Cost Approach, we determine the market value of the vacant subject site and the replacement cost of the existing improvements. Then we estimate the amount of accumulated depreciation of the subject property, subtracting it from the total to arrive at the property’s market value. We generally use this approach for public buildings, such as schools and churches.

 

3. Income Approach

The income approach estimates the value of the property by the amount of income that it can possibly generate. Therefore, this approach is used for apartments office buildings, shopping centers, and other income producing properties. We calculate the income according to the following steps:

  • Estimating the potential annual gross income by performing market studies to determine what the property could earn.
  • Calculating the effective gross income by subtracting the vacancy rate and rent loss as estimated by one of our appraisers using market studies.
  • Calculating the net operating income by subtracting the annual operating expenses from the effective gross income. Annual operating expenses include real estate taxes, insurance, utilities, repairs, maintenance, advertising and management expenses.
  • Estimating the capitalization rate, which is the rate of return that other investors of property are receiving in the local market.

 

Market Valuation Services in NJ

Our professional staff is expertly trained in real estate valuation and market value estimates. We maintain the complete detailed files on thousands of sales and leases, and have extensive contacts to obtain the latest information. If you are looking for a market value estimate for your real property, do not hesitate to contact us today for our valuation services.

 

 

[1] Uniform Standards of Professional Appraisal Practice (USPAP). Washington, D.C.,   The Appraisal Foundation, 2016-2017