Valuation Rules According ECO/805/2003 (III)
Market Value and Replacement Value. Checked Area and Computable Area. Comparable Properties. Urban Levels.
The Spanish Order ECO/805/2003 defines the Market Value (VM) as the price at which the property could be sold on the date of the valuation. In determining the Market Value is necessary to consider:
- that there is no prior relationship between seller and buyer
- that neither the seller nor the buyer holds any personal or professional interest in the transaction, excluding those associated with the cause of the contract
- that the public offering to the market occurs through a proper marketing strategy and with no inside information
- that the price of the property is consistent with the public offer and reflects a reasonable estimate relating to market conditions existing at the date of the valuation
- that the price does not include any taxes or marketing expenses.
Definition of Replacement Value (VR)
The Replacement Value (VR) can be gross or net. The Gross Replacement Value (VRB) is the sum of all the investment costs required to build, on the date of valuation, another property with the same characteristics (capacity, use, quality, etc.) but using current technology and materials. The Net Replacement Value (VRN) is the result of deducting from VRB the physical and functional depreciation of the property on the date of the valuation.
Checked Area and Computable Area
The Checked Area is the floor area as measured by the valuer. The Computable Area is the floor area used in the valuation.
Comparable Properties
Comparable properties are those that are considered similar to the property that is being valued, or appropriate to apply the homogenization, because of its location, use, type, size, antiquity, condition or other relevant physical characteristic.
The Urban Levels of the Land
For the purposes of the valuation, Spanish Order ECO/805/2003 classifies the land into two levels:
- level II: non-developable land
- level I: developable and developed land.
Architect Daniel Trujillano
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