Evaluation method of residual value of old houses

The residual value evaluation of old houses refers to the value evaluation of built houses to determine the value of their transferable or mortgage loans. Due to the depreciation, loss and market situation of the house, its value will change, so it is necessary to evaluate its residual value for reference when buyers and sellers or financial institutions such as banks make decisions.

There are several methods to evaluate the residual value of old houses:

First, the cost method.

This method is based on the cost and construction period of similar houses to determine the value of houses. Its core idea is to take the repair or reconstruction cost as the residual value, which is suitable for houses with short construction period, normal use and good maintenance. The residual value evaluated by this method is objective, but it emphasizes the cost too much and fails to fully consider the changing factors of the market.

Second, the law of the market.

This method is based on the transaction price of similar houses in the market, and its core idea is to determine the residual value of houses on the basis of the transaction price of similar houses, which is suitable for areas with active similar housing markets. The residual value evaluated by this method is intuitive, but some special circumstances need to be considered, such as the serious impact on the housing market in this area.

Third, the income method.

This method is based on the income generated by housing rent, and its core idea is to determine the value of housing with rent as the income source, which is suitable for investment housing evaluation. The residual value assessed by this method depends on rental income and capitalization rate, and factors such as rental market, housing management and maintenance costs must also be considered.

Fourth, the depreciation residual method

This method is based on the depreciation rate and the original value to evaluate the residual value of the house. Its core idea is to determine the residual value according to the written value of the house MINUS the depreciation value of the main elements, which is suitable for the evaluation of houses with long service life or requiring a lot of field visits. The residual value evaluated by this method is more detailed, but it needs professional investigation and data analysis.

To sum up, different methods for evaluating the residual value of old houses have their own characteristics, and it is necessary to choose the appropriate method according to the specific situation.