Target tree method

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The target tree method is a form of utility value analysis aimed at converting values .

use

When determining the market value of real estate , it can be used as a special form of the indirect comparison value method . In this context, it is sometimes known as the “housing value method”.

When determining the depreciation of a property due to (unrecoverable) construction defects, the aim is to assess this in a neutral and comprehensible manner. The procedure was first described by Aurnhammer in 1978 and is recognized by German courts.

When determining rents, it can be used both to determine an appropriate rental price reduction due to defects or to classify a range - if no range classification is specified for a rent index or this is questioned.

Action

The target tree method forms a hierarchical system in which further sub-properties can be assigned to a main property over several levels. The sub-properties are weighted, but this always depends on the way the evaluation object is viewed. So it depends on the use, how important it is whether a house is beautiful or functional.

There are different forms of representation, from a point distribution with a total of the same number of points on all levels and a percentage distribution in which each sub-goal is again equated to a value of 100 percent when it is further divided.

When viewed as a percentage, the sum of all properties always has a value of 100% for the optimal fulfillment of all properties. By multiplying the value proportions of a subordinate level with a higher level, one can then set the weight of an individual property in relation to the whole.

When using reductions, their effects on a maximum value can also be determined directly. However, it should be noted that the minimum value of a value range must never be fallen below. Mathematically, this is taken into account by first subtracting the lower range value from the upper range value, multiplying the amount by the determined percentage value and finally forming the comparison value of the subject of assessment.

In terms of content, when determining the optimal and minimum properties of an object, it must be ensured that they actually correspond to the range to be assessed. But the more properties need to be taken into account, the less likely it is that the financial maximum value corresponds to an optimum of 100% or, conversely, an under-range value corresponds to a minimum of 0%. If the valuation result is to be assigned to a financial value, it must be ensured that the upper and lower values ​​of the range are classified according to the same standards. The final assignment then takes place via linear interpolation .

particularities

When determining market values, it should be noted that the weightings change not only depending on the type of property, but also on the range of comparison properties recorded in a range. It is therefore not possible to apply a fixed percentage distribution. The method nevertheless remains in conformity with the valuation according to the Real Estate Valuation Ordinance if it is only used to interpret the range formed from the prices of actual purchases.

When assessing construction defects, not all defects also lead to an inferior value. In particular, minor damage is to be accepted.

At least half of the target tree procedure is shaped by the decisions, valuations and value judgments of the appraiser or user and thus only partly consists of purely arithmetical or schematic processes. The procedure thus places particularly high demands on the expert's knowledge, experience, market knowledge and impartiality of the appraiser. As a result, the target tree method is largely shaped by the professional competence of its user and, compared to the conventional (standardized) evaluation methods, offers few possibilities for proper application without the necessary specialist knowledge. It is fundamentally not possible to design this procedure so reliably that its results correspond exactly to the “generally valid” (traffic) value in every case. With the consistent application of and compliance with the specifications and framework conditions of the procedure and, above all, with the necessary technical competence, the target tree procedure is a way of presenting valuations and evaluation results in more detail and more plausibly. Particularly in the case of problems that only enable a result using poorly justified and hardly comprehensible general approaches, the target tree method offers possibilities to make a valuation more substantial or plausible. Numerous practical applications and court rulings confirm the application possibilities of the procedure.

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  1. ↑ Aurnhammer, HE: Procedure for the determination of impairments in the case of (construction) defects and (construction) damage. In: Building Law. No. 5, 1978
  2. ↑ Oswald, R .; Abel, R .: Additional irregularities in buildings; Typical appearances, assessment criteria, limit values. 2nd Edition. Wiesbaden; Berlin: Bauverlag, 2000
  3. ^ Sandy Pfund: The target tree method as a decision-oriented appraisal aid for property and building appraisals; Diploma thesis in the industrial engineering / construction course at the HTWK Leipzig, 1999

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