Our Asset Valuation Methods
There is a great variety of asset valuation methods a valuer can use when conducting valuations. Each method serves a particular purpose. It is up to each individual Adelaide plant & equipment valuer to determine the most appropriate valuation method for the situation.
When it comes to the valuers of Plant and Equipment Valuation SA, they rely on their 20+ years of experience and their continued training and development to apply the best methods of asset valuation to every report. There are three key fixed asset valuation methods we use regularly for reports. Not all methods below are applied to every valuation, but they are the most accepted methods of valuation. These 3 key valuation methods are:
- Direct Comparative Sales
- Income Capitalisation
- Cost Approach
Direct Comparative Sales
Arguably the most widely known and accepted method for any asset valuation. Sometimes called the comparison approach, this method has a valuer looking into comparable assets that have been recently sold in the area. These recent sales will be from within 6 months from the measurement date, with more accurate reports using sales from within a 1-month window. This is all subject to available sales data for the asset and if there are sufficient comparables.
A comparable must be the same in use, class, age, and condition to be considered ideal. Other factors must also be considered depending on the sort of asset. With property, comparables would be the same size in square metres and location. For technology and equipment, the comparable would be of the same age, condition, and model.
Once a valuer has gathered all comparable sales data, they use the averages to calculate the value of the subject asset. Depending on the quality of the comparables, a valuer may need to adjust their calculations for a more accurate report.
Income Capitalisation
This is a type of valuation is that is mainly used when an investor wants to consider their options or want to assess a current investment. Also referred to as the income approach, this is a valuation method that allows valuers and investors to compare several income-generating assets to their comparables.
The valuer uses comparables and their net operating income and capitalisation rate to calculate the value of the asset being valued. This is a popular method for property, particularly commercial properties that are being leased or about to be purchased for leasing purposes.
Cost Approach
The cost approach is another well-known method of valuation. In short, it is a summation of every variable that has influenced the value of an asset. This would include the same things that create a good comparable for the methods above as well as other relevant information that can affect asset value. This could include such things as:
- the frequency with which it is used
- how current it is (Are there more updated versions available that are more desirable?)
- the condition of the asset and an estimate of its remaining useful life
- the ease with which it can be replaced, and the costs associated with its replacement
- how well the asset has been maintained
This method may be used for a variety of purposes and is often used as a secondary asset valuation method to support or complete the findings of the direct comparative sales approach.
Why Use Our Valuation Services?
Our experts have been assisting companies and individuals find the value of assets for well over 2 decades each. They are well-versed with the most accepted and precise valuation methods. This experience also lends to their efficiency. Clients can expect their reports promptly and accurately which only a senior valuer can guarantee.
All valuers on the Plant and Equipment Valuation SA team are Certified Practising Valuers (CPVs) of Plant and Machinery, fully accredited by the Australian Property Institute (API) and registered with the Royal Institution of Chartered Surveyors (RICS), with many also holding AVI qualifications. This robust combination of qualifications ensures that every report is created to the highest standard, and every valuation from our firm complies professionally with both domestic and international standards.
If you would like to learn more about our valuation methods or our various asset valuation services, contact our team today. You can reach one of our friendly specialists by calling (08) 7078 3538 or filling in our contact form.