Real Estate Valuation 

Use

You can use this process for calculating a value that can then be entered as the value for the real estate. The master data for real estate that you maintain in different screens (namely the Description, Land, Construction, Costs and Usage) can be used for calculating this value.

Prerequisites

In the Implementation Guide (IMG) Customizing for real estate, you must define valuation methods for calculating the value of real estates. You define these values by choosing Collateral Management ® Object Management ® Collateral Objects ® Real Estate  ® Valuation ® Define Valuation Methods.

For example, you can define valuation methods such as cost depreciation method, an income capitalization method, building value or commercial rental value. The calculation logic for each of these methods may vary.

To implement the necessary logic for these valuation methods, you must create implementations of the Business Add-In - CMS_RE_VAL_ONLN.

Additionally, in the Business Data Toolset Customizing for real estate, you must create the screens required to execute these valuation methods.

The standard system provides screens for two example implementations namely the cost depreciation method and the income capitalization method.

 

Process Flow

...

       1.      Select the screen for the valuation method that you want to use.

       2.      Enter the required data.

Most of the values for the calculation will be selected from the master data maintained for the real estate.

       3.      Execute the valuation logic by choosing the button with  icon.

The standard system provides Business Add-In implementations for the following valuation methods:

Valuation Method	Description
CMS_RE_VAL_ONLN_ACOM	Total Commercial Rented Area
CMS_RE_VAL_ONLN_ARES	Total Residential Rented area
CMS_RE_VAL_ONLN_BLD  CDM	Build Value
CMS_RE_VAL_ONLN_CDM	Cost Depreciation Method
CMS_RE_VAL_ONLN_GCOM	Commercial Gross Value
CMS_RE_VAL_ONLN_GEN	Generic Valuation Implementation
CMS_RE_VAL_ONLN_GRES	Residential Gross Value
CMS_RE_VAL_ONLN_GTTL	Total Gross Value
CMS_RE_VAL_ONLN_ICM	Income Capitalization Method
CMS_RE_VAL_ONLN_LAND	CDM - Land Value
CMS_RE_VAL_ONLN_NCOM	Commercial Net Value
CMS_RE_VAL_ONLN_NRES	Residential Net Value
CMS_RE_VAL_ONLN_NTTL	Total Net Value
CMS_RE_VAL_ONLN_RCOM	Commercial Revenue Value
CMS_RE_VAL_ONLN_RRES	Residential Revenue Value
CMS_RE_VAL_ONLN_VCOM	Total Commercial Rented Volume
CMS_RE_VAL_ONLN_VRES	Total Residential Rented Volume

You must create the screens for the valuation methods that you want to use. The standard system provides the screens for the valuation methods - cost depreciation and the income capitalization.

Cost Depreciation Method

This method allows you to calculate the total value for real estate by summing up the land and building values. It also considers any depreciation for the building value for calculating the real estate value.

COST DEPRECIATION VALUE = LAND VALUE + BUILD VALUE
Value	Base Measure	Formula
Land utilization cost	unit area	Amount specified as land cost
	absolute	land cost * land area
Land development cost (for main real estate)	unit area	Amount specfied as development cost
	absolute	Development cost * land area
Land additional cost (for main real estate)	unit area	Amount specified as land additional cost
		Amount specified as land additional cost * land area
Land value		Sum [(land utilization cost) (land development cost) (land additional cost)]
Construction cost	Unit area	construction cost * usable area - [ (depreciation * construction cost * usable area) / 100]
	volume	construction cost * usable volume - [ (depreciation * construction cost * usable volume) / 100 ]
	absolute	construction cost - [ (depreciation * construction cost) / 100]
Build value		Sum (construction cost)

 

Income Capitalization Method

This method allows you to calculate the total income (commercial and residential) from a real estate. It considers the values specified in the tab page Usage to perform the calculations.

The income-capitalization method will not be valid for calculation if the main usage type has been set to Self.