外文翻译Method of Valuation英文.doc

中原工学院经济管理学院外文翻译MethodofValuationTheComparativeMethodThereareconventionalfivemethodsofvaluation:thecomparativemethod,thecontractorsmethod,theresidualmethod,theprofitsmethod,andtheinvestmentmethod.Thecomparativemethodisprobablythemostwidelyusedmethodandevenifoneoftheotherfourmethodsisusedbyavaluerhewillstillalmostinevitablyhaverecoursetocomparisonsaswell.Themethodentailsmakingavaluationdirectlycomparingthepropertyunderconsiderationwithsimilarpropertieswhichhavebeensold,findingitsvaluefromthesepasttransactions.Althoughthissoundssimpleandstraightforward,theremaybemanypitfallstotraptheunwary.Inusingthemethoditisdesirablethatthecomparisonshouldbemadewithsimilarpropertiessituatedinthesameare.andwithtransactions,witchhavetakenplaceintherecentpast.Thelessthecomparablepropertycomplieswiththeserequirements,thelessvalidwillbethecomparison.Oftenavaluerisabletogetevidenceofsaleswitchdoaccordwiththeserequirements,particularlywhenavaluationisofapropertysuchasasemi-detachedsuburbanhouse.However,themoreuncommonapropertyis,andthemorespecializedthetypeofproperty,thelesslikelyisitthatthevaluerwillbeabletofindinggoodcomparables,anditisnotunusualfortheretobeacompletelackofevidenceofsalesofcomparableproperties.Evenwhenpropertiesappeartobesimilar,closeinspectionoftenrevealsthattheyareinfactdifferent.Arowofapparentlyidenticalhousesmayoninternalinspectionprovetohavemanydifferences,andtheeskillofthevaluerwillberequiredtomakeanallowanceinmoneytermsforsuchdifferenceinvaluecausedbyadifferentgeographicalsituation.Itisessentialinusingthismethodtohaveasmuchevidenceaspossiblereadilyavailableandgoodofficerecordsareinvaluable.Anyvaluershouldensurethathehasanefficientfilingsystemwhichisregularlykeptuptodate,andwhichcontainsasmuchinformationascanbeobtainedofeachmarkettransactionwhichisrecorded.Moderncomputerfilingsystemsgreatlyfacilitategoodrecordkeepingandthealmostinstantaneousrecallofinformation.However,forhelpfulrecordstobekept,theremustbeevidenceofsuitablecomparablesavailable,andunfortunately,intherealworld,thisisoftenlocking.Thewordrecentisarelativeterm.Atsomepointsintimeasalewhichtookplaceayearearliermayberecentenoughtobeavalidcomparisonifthemarkethasremainedrelativelystableintheinterveningperiod.Ifthemarkethasbeenvolatileorhaschangedinanywayduringthistime,thenmarketevidencemightneedtobemuchmorerecentpast,avaluermaybeabletogetsomeguidancefromconsideringmarketevidenceoverperiodofearlieryearsormonths,asitpossiblethataclearlydefinedtrendofvaluesmightbedetected.Thevaluermaydecidethatthistrendwouldhavecontinuedthroughtobedateonwhichheismakinghisvaluation.Inusingthecomparativemethodamostthroughinspectionofalltheunderlying中原工学院经济管理学院外文翻译factorsinthemarketmustbemadeinordertodecidewhethertheyhavebeenchangesinconditionssinceothertransactionstakeplace.Themethodinvolvesfewdangersifthemarketisstable.Whenitisnotstable,valuermayencounterproblemsinitsuse,andthismayalsobethecaseiftherearefewcomparables,oriftherearenotruecomparables,thatisiftherangeofpropertiessolddoesnotcontainanythingtrulyidenticaltothepropertyunderconsideration.Somedifferencesmayberelativelyunimportant,anddifferencesinarchitecturaldesign,forexamplemayoftenmakelittledifferencetovalue.However,ifaparticulardesignrendersabuildinginefficientinuse,thedifferencemaybeveryimportant,andinusingthemethodthevaluershouldalwaysconsidersuchpossibilities.Theageofabuildingcanbeimportantinthatitmaybesuchastorenderiteithermoreorlessfashionableandinmanyinstancesthestructuralconditionandstateofrepairwillbedirectlyrelatedtotheageofthebuilding.Valuersshouldalsopayconsiderableattentiontotheaccommodationofferedbydifferentproperties,andtrytomakeallowancesforvariationsintheamountoffloorspaceanddifferencesinthelay-outandthenumberofroomsprovided.Allowanceshouldalsobemadefordifferencesinthequalityoffixturesandfittings,andfordifferencesinthesizeofplotsonwhichpropertiesstand.Locationisalwaysveryimportant,andvaluersshouldbewaryofassumingthatvaluesshouldbesimilarbecausethesizeandaccommodationofpropertiesisidentical.Aslightlydifferentlocationcanmakeavastdifferenttomarketvalue.Inusingthismethodthevaluershouldalwaysbearinmindthefactthatpropertyisheterogeneous,andshouldalwaysaskhimselfwhetheranyspecialfactorsaffectedthemarketvalueofthecomparablesthatheisusing,orwhetheranyspecialfactorsarelikelytoaffectthevalueofthepropertywhichheisconsidering.TheContractorsMethodThecontractorsmethod(summation)isusedtovaluethetypeofpropertieswhichseldomchangehandsandforwhichtherearethereforefewcomparablesItmustatthispointbestressedthatcostandvaluearerarelytellsame,butthismethodofvaluationisbasedlooselyontheassumptionthattheyarerelated.Itshouldthereforebeappreciatedthatitisamethodusedonlyinfrequently，andwhichissomethingofalastresortThebasictheoryofthecontractorsmethodisthatthecostofthesiteplusthecostofthebuildingswillgivethevalueofthelandandbuildingsoneunit.Withthemajorityofpropertiesthereisampleevidencetoshow，thatthispropositionisnotcorrect，buttheContractorsmethodisusedtovaluepropertiesforwhichthereislittlegeneralmarketdemandandwhichareconsequentlyrarelysoldThetypesofpropertyforwhichitcouldbeappropriatearehospitals，townhalls，schools，librariespolicestations，andothersuchbuildingItwillbenotedthatthislistcomprisesprincipallypublicbuildings，althoughtheuseofthemethodisnotnecessarilyrestrictedtopublicbuildingalone.Costisnormallyonlyonefactorofmanywhichmayaffectsupplyanddemandandwhichthereforeaffectvalue,butitisprobablytruethatwithtruethatwiththistypeofbuildingitisapredominantfactor.Itwouldalwaysbepossibleforthewould-beusersofsuchbuildingstoacquire中原工学院经济管理学院外文翻译alternativesitesandtoconstructnewbuildingsratherthanpurchaseanexistingpropertyatgreateroverallcostCompetitionbetweenrivalpotentialuserswouldbeunlikelyanditisthereforereasonabletoassumethatcostandvaluearenotunrelatedwithsuchspecialbuildingsHoweverifanalternativebuildingwereconstructeditwouldbeanewpropertv，whereaswithanexistingpropertyitisobviousthattherewouldbesomewearandtearresultingfromisprevioususeandtheremightalsobeadegreeofobsolescencewhichhadarisensinceitwasnew.Inusingthecontractorsmethodthevaluermustthereforemakeadeductiontoallowforbothdepreciationofthebuildingsandobsolescenceofdesign.Thebasicvaluationapproachthenbecomesasbelow：CostofsitePlusCostofbuildingLessDepreciationAllowanceandObsolescenceAllowanceValueofExistingPropertyThismethodismostfrequentlyusedforratingpurposewhereratesareleviedonthevalueofbuildingsandsitestogetheranditisalsosometimesusedinvaluationsforcompensationwhenpropertyofaspecialnaturehasbeencompulsorilyacquiredTheResidualMethodTheresidualmethod(hypotheticaldevelopmentmethod)isusedwhenapropertyhasdevelopmentorredevelopmentpotential.Itisneededwhenthereisanelementoflatentvaluewhichcanbereleasedbytheexpenditureofmoneyonaproperty.Residualvaluationsarequiteregularlymadebypeoplewhopurchaseresidential；propertieswhichtheyconsidercouldbemademorevaluableidmoneywerespentonimprovementandmodernization.Thiswould-bepurchasermaylookatahouseanddecidethatitisworth20000,afterwhichitwillhaveamarketvalueof90000.Aquickinspectionofthefiguresshowsthatlatentvalueof20000hasbeeninuse,butevenwhenmuchmorecomplicatedcalculationsareinvolved,thebasicapproachtothemethodisstillexactlythesame.ValueofthecompleteddevelopmentLessTotalexpenditureonimprovementsordevelopment(includingdevelopersprofit)Valueofsiteorpropertyinitspresentcondition(Residualvalue)ThevalueofthecompleteddevelopmentissometimesreferredtoastheGrossDevelopmentValue,orastheGrossRealization.Theuseoftheresidualmethodinvolvesconsiderableskillanditisfirstnecessarytodecidewhatisthebestformofdevelopmentsuitablefoeorproperty,andthentotask,asapartfromtheskillinvolvedinchoosingthebestuseforasite,thevagueralsohastoestimatethevalueofabuildingwhichdoesnotasyetexist.HehastocasthismindforwardtoestimatetheGrossDevelopmentValue.Evenwhenthishasbeendonewithgreatskillaccuracy,allthecostsofimprovementanddevelopmentmustthenbeestimated.Thesemayincludesuchitems中原工学院经济管理学院外文翻译asthecostofsiteclearance,architectsfees,siteengineersquantitysfees,andallotherprofessionalfeesincurredincreatingthedevelopment,thecostsofbuildingmustbeestimated,andthesecouldwellincreaseduringthetime-lagbetweentheacquisitionofthepropertyandthecompletionofthedevelopment.Onceapropertyhasbeendevelopedithastobeletorsold,andthevaluermustmakeanallowanceforallcostswhichwouldbeincurredinlettingordisposingofthepropertyheenvisagesasonedaystandingonthesite.Thesecostswillincludeestateagentsfees,advertisingfees,andthesolicitorsfeesandlegalexpenses,topurchasethesiteandsubsequentlydeveloporredevelopitwillusuallyrequireaconsiderableamountoffinance,andthecistsofobtainingthismustbedeductedasadevelopmentcost.Noonewillwishtotakealltherisksinvolvedinaprojectwithoutanyreward,andadevelopersprofitmustbeallowed.Themaybeotheritemsofexpensetoconsider,andthemorevariablestherearethemoredifficultitwillbetomaintainanacceptabledegreeofaccuracyinthecalculations.However,askilledvaluerwithaspecialknowledgeofthetypeofdevelopmentforwhichheisvaluing,whoisintouchwiththemarketandwhoidfamiliarwiththecostsofdevelopment,canusethismethodwithaconsiderabledegreeofaccuracy.Therewilldoubtlessbeinstancesinwhich,inretrospect,apurchaserwillbeseentohavepaidtoomuchforapropertybecausethefiguresonwhichtheresidualvaluationwasbasedhavechangedintheperiodsincethepropertywaspurchased.Themethodisneverthelessacceptableforfindingmarketvalue,asitmustalwaysberememberedthatthisvalueisthefigurewhichwouldbepaidinthemarketatadefinitepointintime,takingintoaccountfutureexpectations.Themethodisoftenisoftencriticizedasbeingclumsyandcontainingtoomanyvariables,butthereislittledoubtthatitistheonlyrealmethodofvaluationapplicablewhenthereislaten