What valuation comparables can be used in C.P.O. claim?

pogna

Just wondering what comparables can be used in a CPO claim ?

Lets say notice to treat was served a year before the property was entered / occupied by the acquiring authority. There were no property comparables in the locality ( due to the downturn in the market and no property transactions locally ) in the year the notice to treat was served. However shortly after the property was physically taken , a similar property next door was sold on the open market. Can that be used as a comparable, even though it was a year after the notice to treat ?

Dylan123

The comparable method of property valuation is merely one method used to value property. It is the most common method of valuation today but there are other types that maybe worth looking in to:
(1) Contractors method
(2) Reisdual method
(3) Profits method
(4) Investment method
(5) Discounted cash flow
(6) Mortgage approach

It is desirable that the comparison should be made with similar properties situated in the same area, and with transactions that have taken place recently. The less the comparable property complies with these requirements the less valid the comparison.

The method involves few dangers if the market is stable and active. When its not stable valuers may encounter problems in its use, and this may also be the case if there are few comparables or there are no true comparables.

When using the comparative method a thorough inspection of all the underlying factors in the market must be made in order to decide whether there have been changes in conditions since other transactions took place.
Adjustments are made for each individual market factor upon analysis.

Perhaps the biggest danger in the use of the comparative method is the underling and simple assumption that because in the past one person was prepared to pay a similar figure for a similar property. It may be that the purchaser of the comparable property had special reasons and specific personal circumstances which both prompted and enabled the purchase to be made, such reasons being completely irrelevant to others in the market place.

Property is hetrogeneous (even if it is 1 of 300 seemingly identical houses in an estate)

There are millions of things that influence the value of property:
-International situation
-National situation & finance
-Government policies
-The local economy
-Geographical factors
-Increase or decrease in population
-Changes in age distribution
-Changes in the proportion of married to single people
-Size of disposable income
-Changes in fashion and taste
-The fashionableness of areas change - hence irish in oz
-Changes in type of society
-Changes in technology
-Changes in building methods
-Changes in building costs
-Money supply
-Cost of finance
-Improvement or deterioration in communication
-Planning control
-Location
-Proximity to local amenities

You should get the professional advice of a chartered surveyor as soon as you are served with a notice relating to a Compulsory Purchase Order (CPO). The fees charged by a chartered surveyor are part of a normal claim for compensation.
It is important to remember that you have the right to object, make representations, negotiate, refer to property arbitrators and have your objections heard. I know of a good one!

Compensation
If your house and land is compulsorily purchased, you will be eligible for compensation to restore you as far as possible to the same position as you were in before the land and property was acquired.
-You should be paid compensation based on the market value of your property.
-You should be left in the same financial position after the CPO as you were before the process.
-The compensation should reflect both the actual land acquired and the reduction in value, if any, of the retained area as a result of the CPO.
In reality you will get more than its market value for the inconvenience!

But to answer your question yes this property can be used as a comparable.

gigino

Dylan123 wrote: »

Compensation
If your house and land is compulsorily purchased, you will be eligible for compensation to restore you as far as possible to the same position as you were in before the land and property was acquired.
-You should be paid compensation based on the market value of your property.
-You should be left in the same financial position after the CPO as you were before the process.
-The compensation should reflect both the actual land acquired and the reduction in value, if any, of the retained area as a result of the CPO.
In reality you will get more than its market value for the inconvenience!

I agree with you that common sense would dictate the above should be the case. However, I am aware of one case where the acquiring authority only paid half the market value for the property , compared to what the valuer for the acquiring authority bid on the open market at public auction for the same size piece of development property only a few months after the cpo'd property was occupied ! Its a bit of a scandal in the town and surrounding area.

Dylan123 wrote: »

But to answer your question yes this property can be used as a comparable.

You would think it could have been, and a claim was submitted based on that valuation. However the acquiring authority rejected that claim, and a new claim had to be re-submitted using a multiple of years rent valuation. Interesting.

Dylan123

So basically they have declined to use the comparable method of valuation due to the volatility in the market.

They are capitalizing the rental income into a capital value through the investment method:

Rent multiplied by years purchase @ 6% for 5yrs
Capitalises the section of rent till the next rent review.
+
Full rental value multiplied by the years purchase in perpetuity deferred for 5yrs @ 6.5%
Capitalises the full rental value in perp deferred for 5yrs - then the added risk is represented in the increase in the percentage of the ARY.
=
Capital value

Dee5678

Dylan123 wrote: »

The comparable method of property valuation is merely one method used to value property. It is the most common method of valuation today but there are other types that maybe worth looking in to:
(1) Contractors method
(2) Reisdual method
(3) Profits method
(4) Investment method
(5) Discounted cash flow
(6) Mortgage approach

It is desirable that the comparison should be made with similar properties situated in the same area, and with transactions that have taken place recently. The less the comparable property complies with these requirements the less valid the comparison.




































The method involves few dangers if the market is stable and active. When its not stable valuers may encounter problems in its use, and this may also be the case if there are few comparables or there are no true comparables.

When using the comparative method a thorough inspection of all the underlying factors in the market must be made in order to decide whether there have been changes in conditions since other transactions took place.
Adjustments are made for each individual market factor upon analysis.

Perhaps the biggest danger in the use of the comparative method is the underling and simple assumption that because in the past one person was prepared to pay a similar figure for a similar property. It may be that the purchaser of the comparable property had special reasons and specific personal circumstances which both prompted and enabled the purchase to be made, such reasons being completely irrelevant to others in the market place.

Property is hetrogeneous (even if it is 1 of 300 seemingly identical houses in an estate)

There are millions of things that influence the value of property:
-International situation
-National situation & finance
-Government policies
-The local economy
-Geographical factors
-Increase or decrease in population
-Changes in age distribution
-Changes in the proportion of married to single people
-Size of disposable income
-Changes in fashion and taste
-The fashionableness of areas change - hence irish in oz
-Changes in type of society
-Changes in technology
-Changes in building methods
-Changes in building costs
-Money supply
-Cost of finance
-Improvement or deterioration in communication
-Planning control
-Location
-Proximity to local amenities

You should get the professional advice of a chartered surveyor as soon as you are served with a notice relating to a Compulsory Purchase Order (CPO). The fees charged by a chartered surveyor are part of a normal claim for compensation.
It is important to remember that you have the right to object, make representations, negotiate, refer to property arbitrators and have your objections heard. I know of a good one!

Compensation
If your house and land is compulsorily purchased, you will be eligible for compensation to restore you as far as possible to the same position as you were in before the land and property was acquired.
-You should be paid compensation based on the market value of your property.
-You should be left in the same financial position after the CPO as you were before the process.
-The compensation should reflect both the actual land acquired and the reduction in value, if any, of the retained area as a result of the CPO.
In reality you will get more than its market value for the inconvenience!

But to answer your question yes this property can be used as a comparable.

You mention you know a good one ... any recommendation

Mod
Sorry, recommendations not allowed on Legal Discussion

Aravo

What is being cpo'd land, house garden, house etc