A unified methodology in the application of the comparative approach - the necessity of buildings valuations in Albania

Abstract

As real estate is one of the most valuable assets of any state and any individual, the valuation process takes on a special significance. Valuations are required of different interests in different types of property for different purposes. Among the methods used to determine the value of a property, the simplest and most direct method of valuation is direct comparison. The method is based on comparing the property to be valued with similar properties and the prices achieved for them, and allowing for differences between them to determine the market value. The art of the comparison method is the discovery of relevant data and the subsequent analysis. Comparison can be defined as ‘the act of comparing’ and to compare as “to examine in order to observe resemblances or differences”. As property is unique, no two are truly the same, the problem lies in the adjustment to be made to the comparable to fit the property being valued.

Are known and accepted (within certain limits) the differences in the values reported by different appraisers for the same property and for the same purpose of valuation , but daily contacts with appraisers and appraisals prove that there are significant differences in the reported values. These changes are not simply the result of judgments of different appraisers, but mainly the result of changes in the methodologies used for evaluation.

In this perspective the paper proposes the use of a unified methodology in the application of the direct comparison method in order to narrow such differences. The study includes residential and commercial buildings in the Tirana City.