Valuation of building | House Valuation | Purpose of valuation

House Valuation or Valuation of building :-

Valuation is a method for estimating the current value or price of the property such as a factory, Plot, Flat in an apartment, house or any building etc. there are many factors involved in estimating the current price or valuation of building like Location of the building, Income or rent it may fetch, maintenance of the building, etc. The value may also depend upon the supply on demand and the purpose which valuation is required.

The property must be valuated by considering the below factors:-

  1. Market
  2. Location
  3. Condition
  4. Age
  5. Neighbourhood

valuation of building

Difference between Cost and Value of the building:

There is a significant difference between Cost & Value of building. Cost of Building refers to the “original cost of construction or Purchase” whereas Value refers to the current saleable value of Structure. The price of the cost is fixed (wont change) but the “Value” may changes as per market it may go higher or lower than the original cost.
“The Sale Price of the building” is called Value of the building.

Different purposes of House Valuation or Valuation of building :-

The main purpose of valuation of the building is to know the selling price of the structure. Also, there are other purposes which we are going to discuss below.

6 Different purposes of House Valuation or Property Valuation:

Buying or Selling:

When someone buys the property or sells the property the building valuation is required.

Fixation of rent:

In order to determine the rent of property valuation is required. There are many factors involved in determining the Rent value. Usually, 6-10% of the amount of valuation is fixed as Rent value.


To determine the tax of the property its valuation is required. There are many taxes that are connected with the valuation of building like the Municipal tax, Property tax, wealth tax etc.

Compulsory acquisition:

Whenever the land or a building is acquired by government or law, compensation is paid to the owner by determining the value of the building. Example : land acquisition during the construction of dam.

Mortgage or Security of loans:

When loans are taken against the security of a property valuation is done. This type of valuation is determined by bank officials.


In order to find out  the Insurance amount, the valuation of the property is required.

Also Read: 

Plot area, Carpet Area, Setback area, Plinth Area, Built-up Area 
Plinth Level | Sill Level | Lintel Livel | Natural Ground level & Building Ground level


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