VALUATION OF RESIDENTIAL BUILDING FOR BANK LOAN APPROVAL

The valuation of residential buildings is a fundamental process in the real estate and banking sectors, particularly in the context of housing finance and loan approval mechanisms. Accurate property valuation ensures that financial institutions can assess the true market worth of a property offered as collateral, thereby minimizing financial risk and promoting responsible lending practices. This review paper presents a comprehensive and critical analysis of residential building valuation by integrating theoretical principles, standard valuation methodologies, influencing factors, regulatory frameworks, and practical insights derived from real valuation reports. The study evaluates the applicability of major valuation approaches, including the cost method, sales comparison method, and income method, with particular emphasis on their relevance to residential properties. Furthermore, it examines the impact of key determinants such as location, infrastructure, construction quality, and market dynamics on property value. The role of depreciation and government-prescribed benchmark rates is also critically analyzed. In addition, the paper incorporates findings from multiple real-world valuation case studies to bridge the gap between theoretical concepts and practical implementation. The study concludes that property valuation is a multidisciplinary and dynamic process that requires technical expertise, market awareness, and professional judgment. It emphasizes that standardized and accurate valuation practices are essential for ensuring transparency, reducing financial risks, and supporting sustainable growth in the housing finance sector.