Valuation methods at a glance: The asset value method

In the asset value method, the land value is determined separately from the value of the property built on it. The final market value is calculated by adding both values together. This method is used in particular for owner-occupied detached and semi-detached houses.

The land value is generally determined on the basis of the comparative value method using data from the local expert committee. The production or restoration costs of the building (asset value) are decisive for the calculation of the building value according to the asset value method. Among other things, the size of the living space, the quality of construction, the presence and condition of outdoor facilities such as garages, terraces and gardens are included in the analysis.

This methodology is based on the construction costs that would be incurred if the building were to be rebuilt in this form. The experts can refer to special tables for these construction costs. The following applies: the construction costs of a mid-terrace house are lower on average per square meter than for a detached single-family house.

The degree of wear and tear and the remaining useful life of the property are derived from this value. Experts generally assume a total useful life of 80 years for a residential property. A reduction in value of 1.25 percent of the calculated building value is deducted for each year that a building has been in use. Example: If the building construction costs were calculated at 170,000 euros and the property is 15 years old, the value is reduced by around 31,900 euros to 138,100 euros.

You can "stop" this automatic loss in value by comprehensively modernizing the property. If, for example, a Wilhelminian-style house is extensively renovated and equipped with modern technology (heating system, windows, balconies), then it is virtually of new-build quality again.

Value-reducing factors such as renovation backlogs or defects such as damp cellars are also taken into account. Finally, the so-called market adjustment factor is also used in the asset value method. This is used to take into account the demand for properties of this type. This is because a condominium in a structurally weak small town will have a lower market value than the same residential unit in a large city with high demand.

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