Property valuation possibly based on old court expert reports?

Hello , prices in the East also rose well until 2021. However, this is rarely the case with forced auction properties. It was not without reason that they were unsellable on the market. Little has changed in the meantime. It is rather the case that the properties are 20 years older and therefore less valuable.

Hello @nordanney the prices in the East also rose well until 2021.

The numbers I spontaneously mentioned only go up to 2021 anyway. But especially in rural areas in the East, the price developments compared to the West are a real disaster. Very little has changed there and in the last 1.5 years there has been a real price crash for older properties.

Besides that, I was more referring to the topic of statistics and the breakdown by the original poster to exactly one single property - and there you can (he himself is from Saxony according to his profile) assume rather moderate price increases in the East. Dresden, Leipzig, Halle, Magdeburg, and similar are single locations where prices increased well. But only there. Everything else is and remains (unfortunately) sad province with very manageable prices. It always brings tears to my eyes how cheap you can buy there. But I can't change that either.

The number sequences I mentioned spontaneously only go up to 2021 anyway.

Sorry, it was supposed to say until 2014, so the development up to today is missing.

In order to adjust the asset value to the price level on the valuation date, both the construction price index as well as other market adjustment factors and special property-specific land characteristics are taken into account.

According to my research at the Federal Statistical Office, the construction cost index for residential buildings was 77.0 in Q3/2001 and, for the valuation date interesting to me, 137.8 in Q2/2022. This means that construction costs have increased by 78% based on NHK 2010. The value now stated in NHK 2010 of €1,105 would currently be €1,978. When the appraisal was made in 2001, they used 1714 DM/m², which equals €876/m². This means that NHK has risen to 225% in the meantime, while the land value, which also somehow reflects the purchase interest of the location, has risen to 142%. The land value is calculated from actual sales. If it has risen like that, it simply cannot be that no one wants to live here. Our city sold good building land and currently has to develop new land because there is still demand. Since land to building is about 20/80, I even arrive at a factor of 2.1 instead of 1.93 by NHK calculation. Deducting not yet necessary demolition costs, adding improvements to outdoor facilities, modernization of the heating system and conversions/extensions in the house (value-increasing), deducting an appropriate amount for now 20 years older building fabric (value-reducing), I wouldn't know how I could be wrong with a factor of 1.9-2.0 regarding the current property value compared to the 2001 value appraisal?!

The house builder here built so solidly, the walls are about 36-50 cm thick. With insulation and partially faced brickwork and double-glazed windows. I don’t need to be convinced that this is an energy hog and thus a crazy value loss must be calculated. I manage well with 6 tons of pellets per year, even significantly less this winter.

How forced auctions look here in the East cannot be directly compared with normal house sales 1:1. We bought Property 2 at just over 30% of the market value, Property 1 even at only 10%!! With Property 1, we received rental income for years that was almost exactly the amount we paid once at purchase. And that was only the storage hall, rented to students well below value! If the flat building is still fully rented (now 15%) and the storage hall at market conditions, every year multiple times the purchase price comes in as rent! From a yield perspective, any boom region investor in the "golden West" should be in tears if they only achieve maybe 10-15% yield! Nordanney, what average and top returns have you achieved so far? I don’t even know why I always have to be portrayed by you as a beginner and clueless?! I have lived here for over 20 years (and not paid rent somewhere else), had rental income and ridiculous financing costs, and during that time the value has increased in relation to the purchase price maybe by 600-800%. Is there anyone here who has achieved such figures?

I don’t understand why I always have to be portrayed by you as a beginner and clueless?!

Quite simple. Because all posts contain only layman statements and exactly zero experience on the topic of property valuation. That’s not bad. Not everyone has to be an expert in everything – a Hypzert training takes quite a long time, is expensive, and every appraiser is checked every year.

I manage well with 6 tons of pellets per year

That corresponds to an energy content of approx. 29,000 kWh or about 3,000 liters of oil equivalent.

I don’t need to be told that this is an energy guzzler

For an old building with 300 sqm still acceptable. A modern house with 170 sqm living space consumes about 1/4 to 1/3 of your energy budget. Just for the record on energy efficiency.

How forced auctions work here in the East can’t be directly transferred 1:1 to normal house sales. We purchased property 2 at a good 30% of the market value, property 1 even only 10%!! With property 1 we collected rent for years that almost exactly matched the one-time purchase price. And that was just the warehouse, rented to students far below value! If the single-story building is fully rented (now 15%) and the warehouse at market conditions, the rent income each year is multiple times the purchase price!

That’s not what we are talking about here. Yield and current market are as different as day and night. A bargain purchase and a great yield are great! But none of that has any influence on the discussion of the current market value.

Improvements to the outdoor facilities as well

That practically makes no difference in the valuation. Unfortunately so. Flat rates are used for normal outdoor facilities. Deviating from that requires special reasons.

I wouldn’t know how I can be wrong with a factor of 1.9–2.0 on the current value of the property compared to the 2001 valuation?!

Are we now talking about rough estimates so as not to be off (just throwing out a wildly rough estimate to be happy about the value increase) or a well-founded valuation?

From a yield perspective, every boom region investor in the "golden West" should be in tears if they only achieve 10–15% yield!

Yes and no. Yield comes from two directions. Current income and value increase. In metropolitan areas, the rental yield before tax for multi-family houses in recent years was perhaps only 1–2.5%. That’s not much. But the investor who bought a multi-family house in Düsseldorf-Oberkassel in 2005 collected a meager 2.5% yield every year and then, in 2022, was very happy because the multi-family house sold for 7–10 times the purchase price. Now I will be mean and turn it around. The investor who in the same period bought property in the prospering regions (and there were many) still keeps banging his head against the wall because although he got a significantly higher rental yield, the market value of the property only doubled.
In this respect, your view is also an indication that you are a layman – which is not bad.

No one here wants to harm you. But you are sitting on a very high horse of layman status and do not accept statements from professionals.

P.S. I am still waiting for an apology regarding your statement that I gave you false statistics. That was indeed the negative price development of single- and two-family houses.
And concrete answers to your properties are still pending as well.