Property Valuation Methods: How to Know What a Property Is Actually Worth

Property Valuation Fundamentals

Whether you are buying, selling, or refinancing, knowing a property's true value protects your money. Here are the three methods professionals use.

Comparison Method

Compare with recent sales of similar properties in the same locality. Adjust for differences: floor (higher floors command premium), facing (park/garden facing vs road facing), condition (renovated vs original), and age. This is the most reliable method for residential properties and what banks primarily use.

Income Method

Value = Annual Rental Income / Capitalization Rate. If a flat rents for Rs 30,000/month (Rs 3.6 lakh/year) and the cap rate for the area is 3%, the property is worth approximately Rs 1.2 crore. This method is primary for commercial properties and a useful cross-check for residential.

Cost Method

Value = Land Value + Construction Cost - Depreciation. Useful for independent houses and unique properties where comparison data is limited. Construction cost data is published by CPWD and state PWDs.

Practical Application

Use all three methods and see where they converge. If two methods give Rs 90 lakh and one gives Rs 1.3 crore, investigate why the outlier is different. For properties in established areas like Vasant Vihar and Vasant Kunj, the comparison method with registration data gives the most reliable values. Browse current market listings on Flats Delhi.