Real estate appraisal and real estate appraisal: what are the differences?

Real estate valuation

The real estate valuation is a crucial operation which makes it possible to know the precise market value of a property. It is important since a seller has no interest in offering too high a price, nor in undervaluing his property if he wants to sell it quickly. There are two possibilities for this assessment:

• realize his online real estate valuation with a professional via a specialized platform.

Since the Hoguet law, this method is free when it is carried out via an online platform and often when it is done by a real estate agency. She avoids undervaluing or overvaluing the value of her property by evaluating it herself.

• Evaluate your own well.

With this method, no costs or fees but a risk of bad evaluation. Indeed, an owner can be biased in his estimate by the opinion he has of his property.

There are three methods for calculating the value of your property yourself:

• The comparison method: The simplest of the three, it is also the most prone to errors. Indeed, it is necessary to set up precise criteria of comparison to determine the value of the property. We can base ourselves on the value of a similar property or with similar characteristics. Criteria may include location, area, number of rooms, etc.
• The income capitalization method: For this method, the value of the property concerned must be calculated in relation to the income it can generate. This is done by dividing the amount of revenue generated by the market rate of return.
• The replacement cost method: this method is suitable for estimating buildings. The value of the good is defined by calculating the costs implied by its replacement with identical.

Real estate expertise

According to the FNAIM, the first syndicate of real estate agencies in France, “expertise consists of assessing the market or rental value of a property”.

The market value being the price that can be obtained by the interplay of supply and demand in a real market and the rental value, the rent at which a property could be rented under real conditions.

Expertise is, for example, necessary to assess the market value of a property in the case of inheritance tax or real estate wealth tax.

This expertise can be requested by an owner, an insurer, a judge or even the tax services.

The expertise is obviously paying and is carried out by a real estate expert. His fees are free but are often calculated on the basis of the hourly session and the costs incurred to carry out the mission, such as travel costs.

It should be noted that the profession of real estate expert is not a regulated activity but that there is the European REV certification which recognizes the competence and seriousness of the experts.

Value assessment methods are much more complex than real estate valuation and take into account multiple parameters, both legally and financially, technically, town planning, etc.

Like the real estate valuation, the area, location and condition of the property are taken into account, but the architecture, the materials used during construction, the state of natural risks, the analysis of diagnostics, the state of the market and other criteria are also added to the list for expertise. In addition, the value set by an expert varies over time, both upwards and downwards.