In order to account for the usage of the land, the net operating income is reduced by the Liegenschaftszins (interest paid to the land-owner by the owner of the building, i.e., ground rent). The Liegenschaftszins is the product of the land value and the Liegenschaftszinssatz (interest rate for land use). The Liegenschaftszinssatz is the equivalent of the yield—with some important differences—and is also determined by the Gutachterausschuss.

A property's appraisal value is influenced by recent sales of similar properties and by current market trends. The home's amenities, the number of bedrooms and bathrooms, floor plan functionality and square footage are also key factors in assessing the home's value. The appraiser must do a complete visual inspection of the interior and exterior and note any conditions that adversely affect the property's value, such as needed repairs.


The sales comparison approach is based primarily on the principle of substitution. This approach assumes a prudent (or rational) individual will pay no more for a property than it would cost to purchase a comparable substitute property. The approach recognizes that a typical buyer will compare asking prices and seek to purchase the property that meets his or her wants and needs for the lowest cost. In developing the sales comparison approach, the appraiser attempts to interpret and measure the actions of parties involved in the marketplace, including buyers, sellers, and investors.
Lenders want to make sure that homeowners are not overborrowing for a property because the home serves as collateral for the mortgage. If the borrower should default on the mortgage and go into foreclosure, the lender will recoup the money it lent by selling the home. The appraisal helps the bank protect itself against lending more than it might be able to recover in this worst-case scenario.
These appraisers also perform valuations on commercial property ranging from single to multiple tenant office buildings, shopping centers, retail, industrial, malls, hospitals, health care facilities, warehouses, and hotels to multi-family apartment buildings, co-ops, senior housing, condominium developments, and even vacant land, agricultural, and golf courses.  Regardless of the property type or local zoning, they'll determine the highest and best use of the project and assess the value using the actual or projected cash flow from the property's rent roll and financial statements, using both cap rates for capitalizing year one net operating income (NOI) and discounted cash flow (DCF) of multiple future income streams.  If you're a commercial lender, investor, builder, contractor, architect, or agent, you'll want to use these appraisers to conduct a feasibility analysis of any income producing real estate project you may be considering.  They can also help consult on construction costs and projected absorption rates.  They generally produce a commercial narrative appraisal when engaged for any commercial assignment.
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