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🧮 MarketApproach Documentation

🧮 QUICK DOCUMENTATION​

  • File Path: /Domain/Entities/MarketApproach.cs
  • Database Table: MarketApproaches
  • Primary Purpose: Provides data and algorithms for market-based asset valuation
  • 🔑 Key Fields:
    • Id (int) - Primary key
    • AssetId (int) - Links to the parent asset
    • Type (MarketApproaches enum) - The market approach type
    • PropertyValue (decimal) - Total property value
    • LandTotal (decimal) - Total land value
    • LandArea (decimal) - Area of the land
    • ImprovementsPct (decimal) - Percentage of improvements to value
    • IndexationPct (decimal) - Adjustment for time-based changes
  • 🔗 Related Models:
    • Asset (parent) - The asset being valued

📝 DETAILED DOCUMENTATION​

🧮 Overview​

The MarketApproach entity contains data and methods needed to perform market-based valuations of assets. It supports three types of market approaches: Improvements on Land, Item Only, and Land Only. Each approach uses different calculations to determine market value based on property values, land values, improvement percentages, and indexation factors.

🏗ī¸ Model Details​

  • Namespace: AVP.Domain.Entities
  • Inheritance: IClientEntity

🧮 Market Valuation Approaches​

The MarketApproach entity supports three distinct valuation methodologies:

  1. Improvements On Land

    • Values both land and improvements separately
    • Applicable for buildings on land parcels
    • Formula: MarketValue = LandTotal + (PropertyValue - LandTotal) × IndexationPct

  2. Item Only

    • Values the asset directly without land considerations
    • Applicable for vehicles, equipment, art, etc.
    • Formula: MarketValue = PropertyValue × IndexationPct

  3. Land Only

    • Values only the land component
    • Applicable for vacant land, parks, etc.
    • Formula: MarketValue = LandTotal × IndexationPct

🧮 Calculation Methods​

The entity provides several key calculation methods:

  1. LandRate()

    • Calculates land value per unit area
    • Returns LandTotal / LandArea if area > 0
    • Returns 0 if area is 0 or negative

  2. MarketValue()

    • Calculates total market value based on approach type
    • Handles different calculations for each type
    • Applies indexation to adjust values over time

  3. ImprovementsValue()

    • Calculates the value of improvements separate from land
    • Returns PropertyValue - LandTotal for Improvements On Land
    • Returns PropertyValue for Item Only
    • Returns 0 for Land Only

📝 Business Rules Applied​

  • MarketApproach is used when an asset's ValuationType is set to Market
  • Different calculation methods are used based on the Type of market approach
  • The LandRate() method calculates land value per unit area
  • The MarketValue() method calculates the total market value based on the approach type
  • The ImprovementsValue() method calculates the value of improvements separate from land
  • Domain events are triggered when values change, ensuring asset valuations are recalculated
  • The approach handles various edge cases including preventing negative improvement values

📊 Application in Valuation​

ℹī¸ Note: Market approach is typically used for:

  1. Asset Types with Active Markets

    • Residential and commercial properties
    • Vehicles and mobile equipment
    • Art and collectibles
    • Standard office equipment

  2. Fair Value Measurement

    • Supports Level 1 and Level 2 fair value hierarchy
    • Provides market evidence for financial reporting
    • Creates defensible valuation basis for audit

🧮 Indexation Application​

The IndexationPct field enables time-based adjustments:

  • Adjusts historical market data to current valuation date
  • Accounts for market trends and inflation
  • Formula: CurrentValue = HistoricalValue × (1 + IndexationPct)

📝 Business Context​

The market approach directly supports these business needs:

  1. Financial Reporting

    • Complies with market evidence requirements in accounting standards
    • Provides transparent valuation methodology
    • Creates audit trail of market-based evidence

  2. Property Management

    • Separates land from improvement values
    • Supports taxation and insurance calculations
    • Enables comparative analysis with similar properties

  3. Market Analysis

    • Tracks property value changes over time
    • Provides basis for trend analysis
    • Supports investment decision-making