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When industry experts describe real estates, their vocabulary may include legal terms, the meaning of which is sometimes incomprehensible for others involved in the transaction. "If the buyer and the seller of a property are acutely aware of what the "price" is, such terms as "market value" or "cadastral value" are sometimes embarrassing" - explains Inga Ermale, Head of the 3rd Valuation Division of ARCO REAL ESTATE.
The real estate valuator emphasizes that people who are starting to act in order to sell or purchase a real estate, are increasingly showing interest in the nuances of the transaction, which clearly indicates that the parties involved in the transaction are willing to understand the financial aspects of the transaction and to monitor its compliance with laws and regulations. Inga Ermale also adds that valuators of ARCO REAL ESTATE in their daily work with customers are happy to explain differences in these concepts and encourages people do not hesitate to ask anything that is not clear.
To facilitate the understanding of concepts characterizing real estate value, Inga Ermale, a certified valuator of ARCO REAL ESTATE, answers to frequently asked questions.
What is cadastral value of real estate?
The cadastral value is value of land and buildings, which is calculated according to internationally recognized, uniform and government-approved national criteria, taking into account the location of the property, registered data on the qualitative condition of the property, type of use, area, encumbrances, and other criteria.
How is the cadastral value calculated?
Cadastral value of each property is calculated by the State Land Service automatically, based on the data entered in the cadastral information system, which are registered at the owner's initiative, including cadastral survey data and information provided by the municipality. In the calculation there is used a basic value of the land or building area unit (conditional standard price) at a particular location for each property type according to the purpose of its use. A range of value-reducing factors is applied to this value, resulting in a cadastral value.
Does the property market value differ from the cadastral value?
Cadastral value calculation models or formulas are designed to bring, as much as possible, the cadastral value of each property nearer to its market value, without evaluating each property individually. Possible market price of a property is calculated by a certified property valuator, but these valuations can not serve as a basis for change of the cadastral value, since in such valuations there are often used individual criteria, such as the surrounding landscape, which are not taken into account when determining the cadastral value. Also in the calculation of the cadastral value, just as in the individual valuation, the real estate market transaction data are taken into account when determining the reference value.
Why is the cadastral value necessary?
The cadastral value is the basis for calculation of real property tax, various fees (in legacy or donation formation situations) or land lease fee, it is used both by local governments and various state authorities, as well as land and building owners in their mutual transactions or disputes.
What is market value of a real property?
Market value is an estimated amount at which the property should be transferred from one owner to another on the valuation date in an arm's length transaction between a willing seller and a willing buyer according to a relevant offer, each party acting competently, with calculation and without coercion.
Who calculates the market value of real properties?
The market value is calculated by members of the Latvian Association of Property Valuation – certified valuators. In ARCO REAL ESTATE, valuation of real properties throughout the territory of Latvia is carried out by the Real Property Valuation Department.
What is the real property purchase or transaction amount?
Transaction amount is the monetary value of the purchase that has actually taken place, i.e., the sum of money for which the property has been purchased/sold. The transaction amount at the time of corroboration of the ownership rights is recorded as an entry in the Land Register. The purchase price is also being used to calculate the amount of the state fee (more about the state fee).
What is the price of a real property?
The real property price is a subjectively determined amount of money for which the seller wants to sell his/her property. By a mutual agreement between the seller and the buyer, the price of a real estate may be changed.
20.08.2026.