Cost, Price and Value - Valuation - Quantity Survey Estimation and Valuation

TL;DR

This video explains the difference between cost price, which is the amount incurred in producing a property, and value, which is the worth of a property in the market.

Transcript

hello everyone in this video we are going to see cost price and value what is the difference between cost price and value you may get confused between cost price and value what is the cost what is the price and what is the value that i am going to show you in this video so first we will see what is the cost see cost refers to the historical constru... Read More

Key Insights

• 🇨🇷 Cost refers to the amount incurred in producing a property, including the cost of land, without any profit added.
• 👷 Price is the total cost of construction plus the profit added, which is the amount at which a property is bought or sold.
• ❓ Value is the worth of a property in the market, determined by how much a willing buyer will pay or a willing seller will sell the property for.
• 🥡 The value of a property may differ from its cost and price, as it takes into account market dynamics and demand.
• 🇨🇷 Understanding the difference between cost, price, and value is essential for accurately evaluating real estate investments.
• 👷 Cost is a historical construction expense, while value is a current market assessment.
• 🇨🇷 The cost of land is included in the cost but not in the price, which includes the profit component.

Questions & Answers

Q: What is the difference between cost and price?

Cost is the amount incurred in the construction of a property, including the cost of land, while price is the total cost of construction plus the profit added.

Q: What is the value of a property?

The value of a property is its worth in the market, determined by how much a willing buyer will pay or a willing seller will sell the property for after it has been exposed to the market for a reasonable time.

Q: Can you give an example of cost, price, and value?

Sure! Let's say the cost of constructing a house is $200,000 and the cost of the land is $50,000. The total cost would be $250,000. If the seller adds a profit of $50,000, the price would be $300,000. The value of the property would be determined by the market, let's say it sells for $320,000.

Q: Does the cost include any profits?

No, the cost only includes the amount incurred in the construction of the property and the cost of the land. Profits are added to the cost to determine the price.

Summary & Key Takeaways

• Cost refers to the amount incurred in constructing a property, including the cost of land, and does not include any profits.

• Price is the amount at which a property is bought or sold, including the profit added to the cost.

• Value is the worth of a property in the open market, and it is the amount a willing buyer will pay or a willing seller will sell the property for.