14‏/08‏/2023

Real estate Evaluation

What are the basic principles of the Code of Ethics and Conduct of the Evaluation Profession?

- Integrity, the resident is committed to clarity, honesty, and honest dealings in commercial relations away from fraud and deception, in addition to doing his work with credibility, professionalism, and sincerity.

- Independence The resident may not act in a biased manner, with no direct or indirect interest for him, his company, or his relatives affecting the assessment of the asset, while ensuring that there are no conflicts of interest and commitment to impartiality when performing tasks.

- Competence, where the evaluation is done with high professional competence and in the best way, i.e. with professionalism, diligence and commitment, and maintaining professional competence at the required level.

- Professional behavior, maintaining confidentiality of information and working with transparency and clarity, taking into account the interests of clients.

- There are also organizations to develop valuation standards in all its branches, including the International Valuation Standards Council (IVSC), the Royal Institute of Chartered Surveyors (RICS), which require professional evaluators to have a deep understanding of the principles involved, and the evaluator must be impartial and objective, and he must have the necessary skills and training to conduct an evaluation Accurate and adhere to professional behaviour.

What is the objective of the real estate appraisal?

Real estate appraisal has many goals, including determining the value for the seller to be able to sell or help buyers determine the appropriate purchase price for the market and determine the fair market rent in addition to determining the value for the purposes of dividing inheritance fairly and finally evaluating real estate when establishing companies or for the purpose of preparing financial statements.

Real estate valuation is a valuable tool for many different industries and can be used for real estate insurance and transfers, financial principals, and financial investigations.

What are the methods of professional real estate appraisal?

There are several methods of real estate appraisal, including:

1. Market valuation depends on prevailing market prices at the time of evaluation, so that real estate is comparable and closer to the characteristics of the real estate subject of evaluation with appropriate adjustments by deducting the value of the items that represent an advantage in the comparative real estate, and adding the value of the items that represent an advantage of the real estate to be evaluated until it is Determine the value of the property.

2. Evaluating the property using the income method, which depends on converting the expected future income from the property into a present value and transferring it to capital, while relying on the principle of expecting future benefit, through the use of capitalization and discount rates appropriate to the market and the nature of the property.

3. Evaluating real estate using the cost method. The cost method is considered one of the basic evaluation methods besides the market and income methods. The value of the property is calculated in this method by estimating the cost of the land and the cost of building a new property with equal benefits. Two methods fall under this method:

A- Reproduction method: the cost of producing a virtual replica of the current building, using the same design and construction materials of the property under evaluation.

B- Replacement cost method: The estimated cost of constructing a building with the same benefits and facilities and using building materials, standards, designs and plans currently used in the market.

Both methods depend on the principle of substitution, which is based on the fact that the prudent buyer does not pay for a property a price that exceeds the cost of purchasing a site and residence built on it with similar benefits and facilities after adding the cost of time and effort for develo