The value of land should be calculated separately and then add it to the depreciated cost of building structures. The value of the property is usually calculated using the principle of comparative prices of sales; it analyzes the location and improvements except buildings of the property subject. Because the technique involves the sum of values obtained for building and land separately, it is also called the value added methodCertain properties valued for its antiquity and its price is set accordingly, the designation as a monument heritage can be a blessing or a misfortune because it requires investment for habitation.
Michael trainer & assessor photo There are several drawbacks in the application of this method as not being giving it the highest and best use of the land, so that an analysis can be idle. As is becomes the commercial property, it is common to increase the value of the land. The value of any structure may also increase, but those recorded highest increase will be adaptable to business. The appraiser always begins its work by a current price estimate of the cost of constructing a new building that is physically or functionally identical to the subject to valuation.
The construction cost estimated by the appraiser will be the cost of substitution or replacement of the subject The replacement cost is the amount in money that is required to produce an exact duplicate of a building at current prices. For those old buildings that have attained the status of “historic” the task becomes considerably more difficult. For properties that are not economically viable replacement cost, the appraiser estimates the cost instead of replacement of structures. Current price is the construction of a building that has the same utility structure subject, of course will be noted as a condition for the appraisal, it is impossible to exactly duplicate the subject property on the market today.
Some top real estate brokers in India are the leading source of calculation of replacement cost.