Not everyone can appraise real estate prices, because this also involves many issues and many agencies. Therefore, to evaluate real estate prices, appraisers need to master the principles of real estate appraisal according to regulations. In order to determine the exact value of assets and closest to the real value, help businesses have appropriate business plans.

Principle of highest and best use

This is considered one of the most important principles of real estate valuation. A property is rated as the highest and best use, if at the time of valuation the property is being used legally, for a large income, there is a possibility for a large future net income. The content of the highest and best use principle is reflected in material, legal, usage and time aspects.

Principle of supply - demand

Market prices are determined by the interaction of supply and demand. When the quantity supplied increases and the quantity demanded does not increase or decrease, the market price will decrease. When the quantity of supply and demand increases or decreases together, the price will increase or decrease depending on the speed of increase and decrease of supply and demand. Price increases when the growth rate of demand is greater than supply and vice versa.

Principles of evaluation of factors involved in the process of generating real income from real estate

In order to estimate the real value of a property, it is necessary to fully assess the factors involved in the process of generating real income from that property through the review and evaluation of the face value of each element. . To ensure uniformity in value, the values ​​of each element will be brought to the same time plane. Factors involved in the process of generating real income from real estate include: Labor, capital, land and management.

Principles of change

The types of real estate are always influenced by many factors such as: the forces of nature, economy, state and law, society and environment. This changes the value of real estate, the environment of the real estate and the market trend for the type of real estate. Estimates of market real estate prices or market-based pricing are only valid at the time of valuation, but they reflect the future trend of real estate.

Principles of proportion

A reasonable investment between factors affecting the market price of a real estate or properties in the same area or a defined region. So that the value obtained from the real estate can reach the highest level.

Matching principle

The real estate price appraisal must be based on a single use value for the entire real estate. Each real estate at the same time can have many different types of values ​​such as values ​​for residential, commercial business - services, current value, potential value ... In which, the purpose of land use is legal basis and dominates the use purpose of the whole real estate.

Principles of competition

The real estate market is considered an imperfectly competitive market, the nature and extent of competition is not as fierce as conventional goods. But the impact of this competition is important in the valuation of housing and real estate. Buyers can compare the prices of properties and choose to buy them at the locations they like or the prices are attractive.

Principle of contribution

The value of a real estate component depends on its contribution to the value of the total income from the property it participates in. For properties that make a profit, the value of a portion of the propertys property can be quantitatively measured in terms of the value it contributes to total real income.

Principles of increase and decrease of profit

When the continuous increase of one factor in production takes place alongside other fixed factors, the real income will increase to a certain limit. Then the continuous increase of that factor will reduce the value of real income in the future.

Principles of increasing and decreasing real estate value due to the impact of other real estate

This is a reflection of the value-dependent dependence of the subject real estate invested compared to comparable properties in the same value area. The market value of real-estate properties will be increased, due to the integration with other properties in the region of the same type. Real high value properties are located in areas with lower value properties. The market value of high-value real estate will tend to decrease compared to its real value.

The principle of substitution

The market price of an immovable property tends to be imposed by the selling price of an alternative real estate that is similar in value and convenience to the real estate. The principle of substitution acts as the basis for three real estate valuation methods: real estate valuation based on price, market and income.

Principle of profitability of the land

This principle states that the remaining income after deducting labor, capital and management expenses is land. The principle of profitability from the land emphasizes the unique characteristics of the location of the land plot in business and production, explaining why the value of land can drastically change with locations.

Indochina International Investment & Appraisal Joint Stock Company (INA)

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