Property is valuable – but what is it actually worth?

Don’t set the selling price based on a gut feeling or a rough estimate – that is the advice of Sabrina Siegl, a qualified property specialist on the team at thomasgraf ag, when it comes to selling a home or a property. “Property is a significant asset. That is why it is important, as a first step, to determine as accurately as possible how much the property is worth.” And the property valuer, who holds a federal certificate of competence, knows from many years of experience: Many homeowners have unrealistic, often somewhat over-optimistic expectations regarding the value of their property. That is why it makes sense to carry out a property valuation. A well-founded valuation is not the same as a free estimate made from behind a desk. A site visit is essential to assess the micro-location and identify any distinctive features of the property which the owner may not weigh up in the same way as a professional property valuer; she carries out an objective assessment and has an in-depth understanding of the current and regional property market.

Various valuation methods

Various valuation methods can be used to estimate property values. The mixed-value method, which weights the asset value and the income value in different proportions, is a traditional approach. This raises the question of whether, when estimating the income value – and thus defining a rental value for a detached house – a so-called ‘consumptive utility surcharge’ should also be applied. In our view, the mixed-value method presents many obstacles that are not ideal for determining the current market value of a property. In the case of a detached house or a flat, the primary consideration is what has been paid for comparable properties in that location; these are referred to as ‘transaction prices’.

Comparable sales method

This method estimates the market value of a property by comparison: the valuation is based on actual prices of other properties that are comparable in terms of location, views, accessibility, fixtures and fittings, or age. The more comparable properties are included in the valuation, the more accurate the result. Various online tools now offer this kind of hedonic valuation free of charge. However, for a free valuation, you pay with your personal data. You will likely be contacted afterwards, as you may well be interested in selling the property if you have enquired about its value. This valuation, however, only provides a range of values and should not be confused with a precise market value estimate carried out by a professional.

Income approach

Anyone who owns property as an investment is naturally interested in its level of profitability. There are various key figures that can be calculated for this purpose. The most common figure is the gross yield, which is often mentioned when selling an investment property.
The income approach is primarily used for investment properties such as let-out properties or commercial premises. It calculates the value on the basis of the future income that the property can generate, taking into account any renovation costs as well as management and maintenance costs, and is capitalised using a capitalisation rate. In the discounted cash flow method, future net income is discounted to the present, which is why a discount rate is used. Management, maintenance and repair costs are deducted from the rental income. In the traditional income approach, these amounts are reflected in the capitalisation rate as percentages. There are therefore significant differences between these methods, depending on what is to be projected for the future.

The most accurate: market value valuation

This method combines various valuation approaches and is based on actual market conditions. It provides the most realistic assessment of a property’s current market value. A market value valuation requires specialist knowledge, experience and access to up-to-date market data. For this reason, only a qualified professional can carry out such a valuation, which also involves an on-site inspection of the property. The market value valuation takes into account location factors, supply and demand, the physical condition of the building, as well as economic and legal conditions. ‘This method helps to avoid overvaluation or undervaluation and provides a sound basis for decision-making,’ explains property valuer Sabrina Siegl. ‘Consulting a qualified and experienced valuation specialist is crucial for determining a sale price in line with market conditions.’ However, it is also worth relying on professional support when purchasing a property. After all, the value of a property is not automatically the same as the price. The price is the result of price negotiations. The market value, however, serves as an indispensable basis for a successful outcome.

Extensive valuation expertise

The property services provider thomasgraf ag effectively supports clients with professional property valuations. Drawing on a wealth of experience and expertise, this successful property marketing firm develops the crucial foundations and meaningful analyses needed to determine the realistic market value of land, commercial properties, property developments, detached houses or flats. This includes the preparation of market value reports, portfolio and potential analyses, as well as yield calculations. thomasgraf ag also develops strategies for property portfolios and produces condition reports and renovation recommendations, as well as investment and profitability calculations.

Integrated property and financial services

thomasgraf ag’s experienced property team also offers an exciting selection of attractive properties for sale. The property service provider is a certified member of the Swiss Chamber of Estate Agents (SMK) and supports clients in the sale of their properties – providing personalised service and adhering to the highest quality standards. Thanks to thomasgraf ag’s close cooperation with the asset manager and family office service provider TRIONINVEST, as well as the financial services provider hypolino ag, it offers combined property-specific and financial expertise, many years of industry experience and a strong network.