Basic Principles of Property Valuation

Appraisers, in addition to learning the principles of valuation,

It must be combined with an understanding of other principles that affect the value of assets, such as:

1) The Principle of Demand and Supply

Human needs are unlimited and have no end date, and the resources that can be used to produce products to meet needs are limited. This is the principle of demand.

Any supply that allows producers to sell all their goods can create maximum profit by using resources in the most efficient and economical way is the principle of supply.

2) The Principle of Exchange

The appraiser must always keep in mind that change is always occurring, which depends on internal and external influences.
By studying the trends that will affect the value of assets now and in the future.

3) Substitution Principle

In valuing any asset, if we can find a substitute with similar characteristics, it will have a lower price, which affects the decision to buy or invest. With several points to consider, such as:

– Market price comparison perspective

– Capital perspective

– Income perspective

4) Highest and best use

This principle is an important principle that always reminds the valuer that the benefits expected to be obtained, any conditions that facilitate it, and any constraints that are obstacles. These things must be understood and understood by the valuer.