Methodology in a PTAM: appraisal method and rationale

The choice of methodology is a technical decision by the appraiser, based on the property's characteristics, the availability of data and the purpose. ABNT NBR 14653 recognizes four main methods.

1 · Direct Comparison

The most common. Compares the subject with similar properties sold or for sale on the market.

2 · Involutive

Starts from what could be developed on the land and, deducting costs, arrives at the asset's value.

3 · Evolutive

Combines land value with the reproduction cost of improvements, applying depreciation.

4 · Income

Calculates value from the revenue the property can generate over time, discounted to present value.

Degrees of foundation and precision

The standard classifies work into three degrees (I, II and III), both for foundation and precision, varying with the number of samples, the statistical treatment and the quality of the data. The higher the degree, the more robust and reliable the result.

That is why this step comes after value research and value definition: the degree can only be settled once you know how many samples were actually gathered.

Applicable standards: the PTAM should state which standards were observed — generally ABNT NBR 14653-1 (general procedures), 14653-2 (urban property), 14653-3 (rural property) or 14653-4 (developments), depending on the asset type.

Methodology in a PTAM: appraisal method and rationale

Degrees of foundation and precision

Do this step in practice, with the PTAM ready at the end

All steps of the guide