Appraising a property consists of defining its market value considering its technical and legal characteristics, its geographical location and all the externalities.

This expertise is done in the amicable or contradictory framework, on a sale, an inheritance, a divorce, or purely patrimonial (IFI – real estate wealth tax).

The market value corresponds to the price at which a property or a real estate right could reasonably be sold in the event of an amicable sale at the time of the Expertise, the following conditions being assumed to have been met beforehand:

The free will of the seller and the buyer
The provision of a reasonable time for negotiation, considering the nature of the property and the market situation
The maintenance of the value at a substantially stable level during this period, and that the property has been offered for sale under market conditions, without reservations, with adequate advertising
The absence of personal suitability factors.

The terms market value, market value or realizable value (expression used in the decree of November 5, 1990, concerning insurance companies) can be considered as synonyms of market value.

The market value of a property can be defined in two hypotheses:

The value of a property free or supposed to be such, assuming that the property is vacant and free of any title of occupation.
The value of the “occupied” property, which considers the presence in the premises of occupants, titled or not.

In the latter case, the value also depends on the legal and financial conditions of the occupation and the quality of the occupant(s).

However, a distinction should be made between the net market value, i.e. excluding acquisition costs, transfer duties and VAT, from the gross market value, i.e. all costs included. In the second case, we then speak of “market value deed in hand”.

Example: The Expertise Of A Detached House

The valuation of a house is a regular activity for a real estate expert. The market is generally known, and the expert has many references.

Although this type of property is common and the number of references is relatively large depending on the geographical sectors, the expert will have to be very vigilant and assess the property in its entirety and put it back on its market.

The values commonly found on the internet today are often not reliable. There are false surfaces, transfer prices with or without non-differentiated VAT, transfer prices that include work to be carried out by the purchaser. It is therefore essential to call on an expert to obtain the estimate of the property most in line with the market price at a given time.

The real estate expertise of a house will focus on deepening certain elements, in particular:

the town planning and the configuration of the plot because the town planning regulations will have consequences on the possibilities of development and extension of the house.
the quality of the construction is to be considered to be brought closer to the market.
The determination of a reference square meter and the definition of appropriate weighting coefficients for the adjoining surfaces.

The methods are sensitive to the size of the field, in particular the method by comparison which will be developed on the integrated field or not.

A distinction is made between:

Free property: the method by comparison is the most used, with particular attention to be paid to the annexes (estimate separately or not) and the quality of the references.
Leased property: the method by comparison can also be used, but the use of methods based on the analysis of the profitability of the property is more often used (is it net or gross profitability?)

Contact Eric to request an independent appraisal of your property’s value

Other Values Estimated As Part Of An Expert Appraisal

“Market” rental value

“The market rental value corresponds to the amount for which a property could reasonably be rented at the time of the appraisal”. It is a financial consideration for the use of real estate, specified by a contract (a lease in most cases), under the usual conditions of occupation, assuming a contract under the conditions of the market in question and the free will of both parties (landlord-lessor and tenant), a reasonable time for negotiation, the absence of a suitability factor, the absence of capital payment when signing the contract (lease right or no gate).
The rental value is always defined excluding value added tax and rental charges. Particular attention should be paid to the distribution of charges between landlord and tenant, particularly in terms of property tax, the case law being relatively precise on these points.

Other rental values

Sometimes, the rental value does not result solely from the law of the market (supply and demand) due to various regulations which govern the determination of the rent. This is particularly the case for certain forms of housing (capped rent).
The rental values used for the calculation of local taxes are also different from market rents, we speak of administrative rental value.
The signing of a lease of a certain duration is often accompanied by counterparties between each of the parties (free rent, specific arrangements, progressive rent, etc.). The rent thus defined is no longer akin to a market rental value but to a so-called economic rent taking into consideration all of these provisions.
Finally, the so-called renewal rental values are defined following disputes between lessor and tenant and are set by legal means according to the market rental value and also the last renewal rental values previously set.

Contributed value

It is only defined within a clearly determined framework (nature and destination of the assets) and concerns a specific operation of contribution or transfer of assets. The choice of the value to be retained will be defined according to the framework of the operation and under the control of the valuers.

Replacement cost

The gross replacement cost makes it possible to determine the replacement value of an identical property by integrating all the costs, taxes, fees as well as the land charge.

The net replacement cost is obtained by applying a depreciation to the gross replacement cost taking into account obsolescence and dilapidation of the construction and equipment.

New value

Defined as being the cost of rebuilding the building by integrating the various costs and fees, the replacement value does not, however, take into account any demolition costs or any loss of rent. It is defined as equivalent or identical depending on the type of building on the basis of professional ratios and/or quotes.

Insurance value

The insurance value is used to determine the amount of insurance premiums and, in the event of a claim, to define the amount of compensation. It is defined on the basis of the new value (identical or equivalent), taking into account or not the obsolescence.

Eviction compensation

Different from expropriation compensation, eviction compensation applies when a landlord refuses to renew the lease for reasons other than those stipulated in the contract. Most often, the eviction compensation will be made up of a so-called main compensation (depending on whether or not the activity can be resettled and continue operating) and additional compensation (moving, re-employment, losses, stocks, dismissal, relocation, mailing, etc.).

Right to lease

The right to the lease, not to be confused with the goodwill (of which it may be a component) and the right of entry (or no door), is a financial consideration for the various advantages linked to the takeover of a lease. existing. Among these advantages, it is possible to cite the main elements: the location, the nature of the authorized activities, the duration of the lease, the duration remaining to run, the possibilities of assignment and subletting, the rent (and the difference possible with market rents), rental charges, etc.

The valuation of a right to lease consists of assessing the value of all the different advantages that a tenant will benefit from for a variable period of time. The value of the right to lease is generally inversely proportional to the amount of rent paid under the lease. It increases with the duration taken into consideration and the degrees of protection or advantages enjoyed by the tenant under the terms of the lease.
There are many other values that are more rarely used: value of forced sale, compensation for expropriation, value in continued use, right of entry or no door, price of convenience, value in use, value of exploitation, mortgage value…