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Scott, Good point about worth and cost being two totally different issues. Does that mean that in terms of conducting a valuation you will always be dealing with a properties 'worth', as it is at a defined point in time and is a hypothetical market transaction? How about in the summation method whereby the 'worth' of the property (at a point in time) is essentially defined by the land value less the depreciated construction 'cost' of the improvements? Please clarify as I am interested in your point.
Also, in terms of the VG land value, why would the purpose of the valuation (in this case) influence the value of the land? I would have believed that the VG estimate (although perhaps relatively inaccurate due to the valuation approach used) would still be a fair indicator of land value under the current market value. Are you suggesting it may be a slightly inflated value due to the fact that it would generate more tax? I would have still assumed however that you would be able to use the VG valuation as a rough guide when attempting to calculate the proportion of a properties value that lies within the land and that of which lies within the improvements although i realise that you would not be able to rely on it from a legal standing or anything.
The age of the home can play a part in the value for a number of reasons. The age is taken into account either by finding comparable properties of a similar age in the comparison method or depreciating the building costs relative to the homes age in the summation method. Basically with age a structure will loose value for a number of reasons, namely things such as changing trends, changing technology (especially in industrial and commercial property), physical obsolescence, functional obsolescence etc.
In relation to your comment about contemporary v older brick and timber; obviously a market will pay more for a modern design, however it again depends on a huge amount of factors. Although professional valuers try to make their valuation as 'scientific' as possible, there is always going to be a small amount of guess work and 'gut instinct' which will play a role in determining the end value of a home. For example, depending on the area overcapitalization may be a large factor that influences the value of a structure in two different locations. In a CBD / waterfront setting a market will value an architecturally designed modern home very highly, however the same structure in a small rural setting with low per capita income may be overcapitalised for the market and although the structure is the same, the value of the house as a component of the entire property value will be significantly less.
This is one flaw in the summation method of valuation as it can easily overlook factors such as overcapitalisation in valuing a property and seems to make the assumption that identical improvements on a property are worth the same value regardless of their location. It seems only to take into account the location when valuing the land component of the property.
I had a feeling that in NSW at least (I don't know anything about Victorian property law), there were laws in regards to the regularity of body corp meetings, voting rights in the body corp etc. If none of this infastructure is in place then i would be doubful of their rights to ask for payment. Also agents are supposed to follow a due dilligence process at the time of sale that discloses any information that could reasonably affect the buyers motivation to purchase the property. If this process was not followed correctly I believe there are laws in place (again in NSW at least) that enforce these practices. At the very least I would have thought that this shoud have been disclosed in some sort of statement from the vendor as part of the due dilligence.
There are several methods of valuing a residential property which are accpeted by proffesional valuers. Two of which include the comparison method of valuation and the summation method. These are often used in conjunction with each other to give an accurate property value. If you wish to derive the land value component of a property you can use the summation method which involves looking at comparable vacant land sales in the same area, and adjusting these values (due to sloping block, corner block, views, proximity to roads, flight paths etc etc etc) to come to a value that reflects the value of your property. Then a valuer would add in the cost of building the property new, which they can find in special builiding guides and then subtract any depreciation (both physical, function etc) to get a fair market value for the property. Also, if you have information on the current value of the property they may sometimes subtract the deprecaited cost of construaction to give a land value.
However, to obtain a rough value of the land component of a property you can find out what the valuer generals office would value the land at for statutory land tax purposes (this valuatoion is completed by the valuer generals office annually).
Hope that answers your question
