The Total Gross External Area of the Building - Research Paper Example

 Title: Lavender Garden Property report Table of contents: i. Abstract ii. Introduction iii. Discussion iv. Conclusion v. Bibliography Abstract: The objective of this report is to inform and make judgment regarding a decision on whether a house located in lavender garden should be purchased at the price quoted taking into consideration the location, condition and defects of the house. The GEA code of valuation is used in the valuation of this house and also the estimation of the value of the house. Site notes: Price quoted: 299,995 Location: prime area, west of Sussex, Worthing road and north lane junction Rooms: Three bedrooms and one master bedroom, kitchen, living room and Dining room Dimensions: both floors- 8.91 meters X 6.59 Room dimension: Bedroom one 2.67 x 3.72, Bedroom two 2.67 x 2.79 Bedroom three 2.49 x 2.79, Master Bedroom 3.52 x 3.72, Dining Room 2.65 x 3.55 Kitchen 3.52 x 4.69 and Living Room 3.45 x 6.59 Roof: in good condition but require repair Walls: concrete walls and in good condition Components: ground floor – kitchen, living and dining room First floor – four bedrooms General condition of the house: the house is in good condition but require minor repairs Introduction: The report analyzes a four bedroom house located in the west of Sussex, the Property is on sale at ₤299,995, however based on the condition of the house and the inconvenience of other costs including repairs and improvements work there may be difficulties on resale of the house in future. The gross external area code of valuation is used in the estimation of the value of the house and this amount is compared to the market value or the selling price of the house and recommendations provided. The paper gives a recommendation on whether to purchase the asset at the current market price. Property description: Viewing the property from all directions the building is not been altered since construction, the walls are made of bricks and covered by a tile roofing which is still in good condition. The ground floor contains a kitchen, dining and a living, and a garage attached to the side of the building. The first floor contains 4 bedrooms of which one is the master bedroom and bathroom. All the rooms in the house are fully furnished The house is located within an already established residential estate. It is located at the junction of Worthing road and north road in the west of Sussex. (Prime location, 2009) The following is a picture of the house: From the picture it is evident that the house is located in an already established residential area, the house is located at the Worthing road and north road junction and the following is a map showing the location: (Prime location, 2009) The following is map showing the location of the house: From the above map it is evident that the house is easily accessible, other amenities include a shopping centre that is only a few yards from the house, a school that is approximately 350 meters from the house to the south. The following diagram shows the floor plan of the house: From the floor plan it is evident that the ground floor contains a large living room, dining room, kitchen and a garage, the area covered by the ground floor is 6.59 meters X 8.91 meters, the ground floor is fully furnished and the floor is also in good condition. The following diagram shows the first floor plan of the house: From the first floor plan it is evident that the first floor contains four bedrooms a bathroom and the spacious master bedroom. The house has a sloping roof supported by a timber framework, it is good condition and no sign of linkages or dampness were evident, rainwater fittings which include gutters were are also in good condition but need cleaning due to the fact that they are clogged and the rainwater down pipe is blocked. The exterior walls on the other hand are made of brick and the inside is finished with solid concrete, the floor is made of thick concrete which is in good condition and no sign of dampness was evident. Valuation: Method: The Gross external area GEA measures the area of the building externally; we calculate the gross external area of the house. (RIC, 2008) Ground floor: Gross external area value for the first floor is determined by simply calculating the total area covered by all the floors of a building externally, therefore the GEA area for this floor is 77.8657 meters squared. First floor: Gross external area value for the first floor is determined by simply calculating 8.91 x 6.59 = 58.7169; therefore the GEA area for the first floor is 58.7169 meters squared. Total Gross external area From the above calculations we now determine the total gross external area for the building, this is calculated by adding 58.7169 + 77.8657 =136.5826, and therefore GEA for the building is 136.5826 meters squared. The following table summarizes the total gross external area of the building and estimated cost per square meter using data from the surrounding residential properties: area in meters squared cost per meters squared total cost ground floor 77.8657 1,200 93438.84 first floor 58.7169 1,200 70460.28 163899.1 Fittings and furniture is estimated at 100,000 and therefore the total estimated value is 263,899, taking this figure and the quoted market price the price of the house is far much higher compared to the quoted price. Reinstatement cost: The reinstatement cost is the cost that may be incurred in the rebuilding of a house, Household insurance is calculated in two parts, this includes building insurance and content insurance, building insurances covers the building and other building fittings, content insurance on the hand covers. (BCIS, 2009) Conclusions: There are various methods used in the valuation of buildings, in our case we have used the Gross external area method in estimating the value of the residential property, the residential property market price is 299,995 while the estimated value is 263,000 and given the condition of the house the market price is much higher than the estimated price, therefore the house is far overvalued in the market and purchasing the house may lead to resale problems in the future. Therefore the house should be purchased at an amount close to the estimated value, the other factor that is a draw back to the value of the house is the design, and latest designs have higher value than older designs. References: BCIS, 2009.Independent cost information of the built environment, rebuilding cost. Available: http://www.bcis.co.uk/ (1st January, 2009) Damodaran, A. 2002. Investment Valuation: Tools and Techniques for Determining the Value of Any Asset, London, John Wiley and Sons. Kahr, J and Thomsett, M. 2005. Real Estate Market Valuation and Analysis London, John Wiley and Sons Prime location, 2009. Lavender garden real estate. Available: http://www.primelocation.com/uk-property-for-sale/localInfo/id/GWSX2362627/ (1st January, 2009) Scarrett, D. 1991. Property Valuation: The Five Methods. New York, McGraw Hill Publishers RIC, 2008. Code of measuring practice, a guide for property professional. Cambridge, University press. Read More