Property valuation report: what it is and how to draw one up

The number of rooms, the presence of ancillary spaces such as garages or cellars, and the condition of the building’s systems are among the factors covered by a property valuation report.

To draw it up and establish a property’s market value, valuers use specific methods. These include the comparative method, based on comparisons with similar properties, and the cost metho

What a property valuation report should include

A property valuation report must include the information needed to identify the property and provide a complete description of it. It should contain its cadastral details, its intrinsic characteristics and the method used to estimate its value.

It is also important to include a comparison with market prices that have helped establish the property’s commercial value. Here are the main elements that should appear in a property valuation report.

The property’s identification and cadastral details

The property must be identified, with the owner’s personal details, the property details and its exact address included. The report should also contain:

• the cadastral data required to identify the property precisely in the Italian cadastre, or property register;
• legal status information, including details of planning and building documents, permits, and the presence or absence of seizures or mortgages.

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Property characteristics

The property should be described in detail, stating if it is a flat, villa or plot of land. Its designated use and the internal layout should be specified, with particular attention to its floor area and number of rooms.

Careful attention should also be paid to the property’s condition, including its finishes and window and door frames. The report should then set out:

• the construction and building-services features, particularly the load-bearing structure, materials used, and the condition of the electrical and plumbing systems;
• any ancillary elements, such as appurtenances including garages, cellars or loft spaces, as well as balconies or gardens.

The property’s setting

The property must be located within its urban-planning context. Its position in the built-up area should be stated, with a detailed analysis of the surrounding area. Available public services and local infrastructure should also be included.

The area’s characteristics should be outlined, alongside data on local market trends.

Valuation methodology

An unquestionably important part of a property valuation report is the method used to carry out the assessment.

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How is a property valued?

It is worth looking briefly at the methods used to value a property correctly. An expert may use the comparative method, which compares the property with similar properties recently sold in the same area. Alternatively, the cost method may be used to calculate what it would cost to construct the property from scratch today.

To complete the assessment, the property’s cadastral income may also be considered through the capitalisation method.

In short, the methods used to value a property are as follows:

• comparative or market method: the property being valued is compared with others that have similar characteristics, such as floor area, location and condition, and which have recently sold or are currently on the market in the same area;
• cost method: the property’s value is estimated by calculating what it would cost to build it today. This takes account of the cost of the land, labour and materials, as well as depreciation resulting from the property’s age and wear and tear;
• cadastral income method: the property’s commercial value is calculated using its rendita catastale, an Italian cadastral income figure. This is multiplied by a revaluation coefficient and a cadastral multiplier, in line with current tax legislation.

Factors that need to be considered

When carrying out a property valuation, several points need to be considered:

• local market trends: it is important to assess supply and demand in the area where the property is located. This includes looking at available services, how the neighbourhood is developing and the time taken for other properties to sell;
• the property’s condition: its structural condition, finishes, electrical and plumbing systems, and energy efficiency should all be checked. Any defects or unauthorised building work are also relevant;
• the property’s characteristics: the floor on which a flat is located, the presence or absence of a lift, the view, aspect, and the presence of a garden or terrace;
• the property’s position within the urban context, which is one of the most important factors in determining its market value.

How to calculate a property’s normal value

A property’s normal value can be calculated by multiplying its commercial floor area — in other words, its square metres — by the figures published by the Italian Real Estate Market Observatory (Osservatorio del Mercato Immobiliare, or OMI) for the relevant area.

The result should then be adjusted using merit coefficients, which are intended to reflect the property’s characteristics accurately and its actual condition.

To establish a property’s normal value, the following information is needed:

• the commercial floor area, meaning the property’s total measured area, including usable internal space, appurtenances and balconies;
• a cadastral extract (visura catastale), which provides the cadastral area and the category assigned to the property;
• OMI property values, available through the Italian Revenue Agency’s website;
• the applicable property valuation coefficients.

The calculation uses the following formula:

Normal value = commercial floor area × OMI value × merit coefficients.

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What types of property valuation report are there?

Property valuation reports are classified by their purpose — for example, insurance or valuation — and by their degree of legal validity.

The main types, based on purpose, are:

• valuation report, or market valuation: this establishes a property’s economic value and is used during sales transactions or when applying for a mortgage;
• technical report: this assesses the property’s structural condition and stability, and is used to plan renovation work;
• insurance valuation: this is prepared to quantify damage after a fire, flood or another catastrophic event;
• valuation report for disputes or inheritance divisions: this is used to establish how property should be divided between heirs or as part of legal proceedings.

The reports with legal validity are:

• simple valuation report: a report signed by a qualified technician, containing declarations or certifications of accuracy;
• certified valuation report (perizia asseverata): the expert formally attests to the accuracy and truthfulness of the information contained in the document;
• sworn valuation report (perizia giurata): the technician signs the report before a public official, such as a notary or court clerk. In the event of a false statement, they may be held accountable through the appropriate legal channels.

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