Valuations
Residential
How Residential and Condominium Properties Are Valued
Generally, residential and condominium properties are valued by using mass appraisal valuation models. The models predict the full market value for each property as of the reference date. Multiple regression analysis tool is used for mass appraisal of residential and condominium properties. Multiple regression is a statistical technique used to analyze data in order to predict one dependent variable using values of known independent variables. In property valuation, market value is the dependent variable. Variables such as lot size, building size and neighbourhood, etc. are the known independent variables. Multiple regression technique replicates the sales comparison approach since it uses sales of properties to predict the market value of the unsold properties.
Market Regions
- For valuation purposes, the city is divided into a number of market regions
- Market regions are developed after careful examination of building type, age, sales price, natural boundaries and volume of properties in each market region
Models
Using multiple regression analysis individual models for residential properties in each market region are developed and used for mass valuation. For condominiums, two models are developed using multiple regression analysis based on condo style; one model for apartment style condos and the second model for all other condo styles.
Residential Properties
The following table shows a list of variables that are considered primary value drivers and secondary value drivers in all of the market models:
| Primary Variables | Secondary Variables |
|
Building Size Lot Size Building Quality Effective Year Built Property Use Code Building Style Neighbourhood Basement Size and Finish Building Condition Site Influences Attached and Detached Garages |
Other Attached Structures (sunrooms, verandas, etc) Other Detached Structures Heating Type Air Conditioning Pool Deck Fireplace Plumbing and baths |
Condominium Properties
The following table shows a list of variables that are considered primary value drivers and secondary value drivers in the market model:
Primary Variables |
Secondary Variables |
Unit Size |
Floor Location |
Testing and Evaluation of the Models
Models are tested and evaluated for appraisal level and uniformity using several measures, including the following:
- Mean
- Median
- Weighted Mean
- Minimum
- Maximum
- Price Related Differential
- Coefficient of Dispersion
For detailed information about the processes used in the valuation of residential and condominium property types, please download or print the following file in PDF format:
How Commercial Properties Are Valued
Generally, commercial properties are valued using the income approach model. An exception is institutional properties, which are valued using the cost approach.
Data Requirements
- Physical characteristics of the property
- Sales
- Income/Rents
- Vacancy
- Expenses
- Bad debt
- Parking, etc.
Model Description
The valuation model for commercial properties comprises an income approach, which involves direct capitalization of net operating income. The basic equation for direct capitalization is:
Market Value = Net Annual Operating Income/Overall Capitalization Rate
Valuation of Specific Commercial Property Types
For detailed information about the processes used in the valuation of specific commercial property types, please download or print the following files in PDF format: