Comparative value method Munich: Real estate valuation explained clearly

1 What is the comparative value method?

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The comparative value method is one of three standardized property valuation methods (in addition to the asset value and income value methods) and is used to calculate the market value of a property. The value of your house or apartment is determined on the basis of actual comparative prices - i.e. purchase prices achieved for similar properties in comparable locations. As this method is based on actual sales, it often reflects the regional market situation very well. However, it is important that sufficient comparable properties are available. In the absence of sufficient comparative data, other valuation methods such as the asset value method or income capitalization method must be used instead.

Norbert Verbücheln, Managing Director of Mr. Lodge, emphasizes: "Especially in a metropolis like Munich, the comparative value method offers a solid basis for realistic property prices - because there are enough comparable sales here."

2 Why is the comparative value method important in Munich?

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In Munich, numerous apartments and houses change hands every year, resulting in an extensive database of purchase prices. In large cities like Munich, the chances are therefore very good that sufficient comparative data is available for typical residential properties (condominiums, terraced houses, plots of land, etc.). Under these conditions, the comparative value method provides particularly reliable results and realistically reflects current market developments.

In a lively city like Munich, even small differences in location or amenities can have a major impact on the price. A precise valuation is therefore important so as not to sell below value or deter buyers with a price that is too high. Short distances to the subway, a quiet residential area or a trendy neighborhood - all of this is directly reflected in the comparative value. An experienced Munich estate agent like Mr. Lodge knows these local nuances inside out and can take them into account when determining the value.

Tip: The market is also changing in Munich. Current interest rates, economic developments and supply-demand trends have an impact on real estate prices. Make sure that you always use current comparative values when carrying out a valuation. Prices from three years ago may no longer apply today if the market has changed.

3. procedure: How does the comparative value method work?

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How does Mr. Lodge go about determining the comparative value of your property? As a rule, the valuation follows this procedure:

1. Property survey: First, the property to be valued is thoroughly inspected. All relevant features are recorded: Location, living space, number of rooms, year of construction, condition, fixtures and fittings, any renovation requirements, etc. Photos and notes help to obtain a complete picture.
2. Obtaining comparative data: The expert then researches comparable sales cases. Sources for this are, for example, the purchase price collection of the local expert committee, current real estate offers, market databases or own sales cases from the past. It is important to find properties that are as similar as possible to your property in terms of location, size, condition and type.
3. Analysis and adjustment: The comparative properties found are compared with your property. No two properties are exactly the same, so the valuer makes adjustments: If the comparative property has a larger balcony or freshly renovated bathrooms, your property would be valued slightly lower in comparison (discount). If, on the other hand, your apartment has a better location or furnishings than the comparative properties, a premium is added to the average comparative price. These surcharges and discounts are applied per feature and must remain proportionate (usually an individual adjustment should not exceed approx. 30 %).
4. Provisional comparative value: A provisional value is derived from the average price level of the comparative properties and the adjustments made. This is usually given as a price per square meter and then extrapolated to the area of your property. Example: If comparable apartments have achieved an average of €8,000 per m², a base value of €560,000 would be applied for 70 m² of living space.
5. Market adjustment: Finally, we at Mr. Lodge check whether the value calculated in this way still needs to be adjusted to the current market situation. If the sales used are somewhat older, for example, or if the market has moved significantly recently, a market adjustment factor is applied. This factor (>1 or <1) corrects the value upwards or downwards, e.g. to take into account recent price increases or decreases in Munich. This gives the final market value.

Norbert Verbücheln explains: "Our experienced estate agents combine data and market knowledge: this means we know exactly which premiums or discounts are justified in the comparative value procedure in order to determine the market value precisely."

4. important factors for the comparative value

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What features of a property particularly influence the comparative value? Here are some of the most important valuation factors that appraisers pay attention to:

• Location: Macro and micro location are decisive. In Munich, this means: How attractive is the district (e.g. Schwabing vs. peripheral location)? What is the infrastructure like - connections to public transport, shopping facilities, schools? Micro-location aspects such as noise (main road? subway nearby?) or views and surroundings are also taken into account.
• Living space and layout: Size and layout of the apartment/house. The price per square meter can vary for very small or very large properties - medium sizes between approx. 30 and 100 m² are often the most sought-after.
• Year of construction and condition: A new build or completely renovated old building will fetch higher prices than a property with a renovation backlog. Year of construction and structural condition (roof, windows, pipes, energy-efficient renovation) are important criteria.
• Features: High-quality features (e.g. parquet flooring, underfloor heating, branded fitted kitchen) and special extras such as a balcony, terrace, garden or underground parking space increase the value. Standard fittings or simple quality lead to a lower comparative value.
• Legal framework conditions: In the case of land, things such as development possibilities or possible encumbrances in the land register (e.g. rights of way, heritable building rights) play a role. In the case of condominiums, community costs and special levies influence the value. If the property is rented out, the rental income and rental contract conditions (e.g. time limits) also count.

Of course, there are other factors (from standard land values to current market demand). This is why no two sales are the same. The art of the comparative value procedure is to take all these aspects into account appropriately in order to find a fair price.

Note: Determining the comparative value may seem simple at first glance (price per m² × area), but the art is in the detail. Small differences - an additional parking space, a fitted kitchen, the condition of the communal property - all of these must be taken into account. This is where the experience of an expert like Mr. Lodge, who knows how much a particular feature is worth in euros, pays off.

5 Advantages and disadvantages of the comparative value method

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Like every valuation method, the comparative value method also has strengths and weaknesses. Here is an overview:

Advantages:

• Close to the market and easy to understand: As real sales cases serve as a basis, the result is very practical. Sellers and buyers find this method easy to understand - it is based on prices actually paid.
• High accuracy (with sufficient data): In cities such as Munich, where there are many standard properties and regular transactions, the method provides reliable values. It is the common method for determining the value of apartments and single-family homes and has proven its worth.
• Current market trends can be mapped: The possibility of market adjustment means that short-term price developments can be taken into account. If property prices are currently rising sharply, this is reflected in the valuation - and vice versa.

Disadvantages:

• Dependence on data: The method stands and falls with the availability of comparative data. If there are only a few or outdated sales cases, the method is inaccurate or cannot be used at all. Ideally, at least 30 to 50 comparable properties from recent years should be available so that statistically reliable statements can be made.
• Limited suitability for special cases: In the case of unusual properties - such as listed properties, luxury villas or very individual houses - there is often a lack of real comparative properties. This is where the comparative value method reaches its limits and other methods are required.
• Reference to the past: Comparative prices show the past. In volatile markets (e.g. with strongly fluctuating interest rates or during real estate booms), the data lags behind current events. Although market adjustment factors can be used to correct for this, there is still a risk that the actual sales price will end up being higher or lower than the comparative value. Experts therefore often recommend checking the result with a second procedure or having it interpreted by experienced specialists.

6. professional valuation and sale with Mr. Lodge

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A well-founded valuation is the key to a successful property sale - especially in a demanding market like Munich. Mr. Lodge has been a competent partner here for decades: as one of Munich's leading real estate agents with over 30 years of experience, Mr. Lodge knows the market conditions inside out. The team specializes in the sale (and rental) of high-quality properties and offers customers a comprehensive service from a single source.

At Mr. Lodge, you receive a professional property valuation from experienced experts. The process is transparent and customer-oriented: From an initial online price analysis to a detailed on-site appraisal and a personal price recommendation, you will be guided step by step. It is important for our estate agents to find a market-driven asking price - in other words, a price that reflects the value of your property and does not deter buyers.

Norbert Verbücheln explains: "For sellers, the current market changes mean that a great deal of expertise is required - especially when it comes to pricing. A market-oriented valuation and a well thought-out sales strategy are now more important than ever. This is where our team of experts can help."

In addition to the valuation, Mr. Lodge can also take care of the entire sales process on request: from marketing (preparation of exposés, photographs, advertisements) to the selection of potential buyers and viewings to price negotiations and contract processing. The company attaches great importance to discretion, transparency and individual advice. As the owner, you benefit from the agents' market knowledge and avoid mistakes in the pricing strategy. Time savings and security are further advantages - you leave nothing to chance, but rely on tried and tested methods and experts.

In conclusion, the comparative value method is an essential tool for determining the correct property value in Munich. Together with the support of an experienced partner like Mr. Lodge, you can ensure that your property is offered and sold at the optimum price. A thorough valuation creates clarity - for you as the seller and for potential buyers. Use this knowledge to your advantage and don't be afraid to seek professional help to achieve the best possible deal.