What is my property worth? The comparison, income and cost methods explained

A property’s market value is not a fixed figure. It is the outcome of a recognised method under Germany’s Ordinance on the Valuation of Property, the ImmoWertV. The comparison, income and cost methods give different results, because each works from different data, and knowing the difference shows whether an asking price is realistic.

This guide maps the three ImmoWertV methods to the property types they suit, sets out the data behind each one, and names the mistakes that come up most often when owners price a property. It closes with the Frankfurt market and digo.immo’s valuation.

What makes a property’s value objective

The market value of a property is the price that would be achieved at the valuation date in the ordinary course of business, given its legal and factual circumstances, its overall condition and its location, disregarding unusual or personal circumstances (§ 194 BauGB). That definition is deliberately objective: neither a seller in a hurry nor a buyer with an emotional attachment changes the market value, even though either can move the price actually agreed.

How that value is derived is set nationwide by the Ordinance on the Valuation of Property (ImmoWertV). It requires that, in principle, the comparison method, the income method, the cost method, or more than one of them, be used; the choice depends on the type of property and the data available, and must be justified (§ 6 (1) ImmoWertV). The market value is then derived from the result of the method or methods applied, weighing how well each one reflects reality (§ 6 (4) ImmoWertV). Running only one method where a second one clearly fits the property risks a skewed answer before the arithmetic even starts.

The three methods at a glance

Comparison method: what similar properties actually fetch

Under the comparison method the value is derived from a sufficient number of prices for comparable land, supplemented where useful by a property-specific comparison factor or standard land value (§ 24 (1) ImmoWertV). That means either a statistical analysis of several comparable prices, or multiplying a suitable comparison factor by a reference figure such as living space (§ 24 (2) ImmoWertV). Only after that step do the property’s own particular features enter the final comparison value (§ 24 (4) ImmoWertV).

This method is at its most reliable where the local valuation board holds enough sale cases in its purchase-price register for the property type and location in question, for instance a condominium flat in a sought-after Frankfurt neighbourhood. Where comparable prices are scarce, for instance for a highly individual property, the method loses its footing.

Income method: what future income is worth today

Under the income method the value is derived from the income the property can be expected to earn on the market, and from period-by-period income where earnings are expected to change materially (§ 27 (1) ImmoWertV). The preliminary calculation draws on the land value, the net income, the remaining useful life and a property-specific capitalisation rate (§ 27 (2) ImmoWertV); the ImmoWertV offers a general, a simplified and a periodic variant of the income method (§ 27 (5) ImmoWertV).

The capitalisation rate is the rate at which a given property market, on average, discounts a particular type of property; valuation boards derive it from actual sale prices and the net income that went with them (§ 21 (2) ImmoWertV). For a rented apartment building or a commercial property in Frankfurt it is the single figure that moves the result the most: a small change in the rate shifts the outcome noticeably, because it is what brings future income back to today’s value.

Cost method: what the land and the building are worth

Under the cost method the value is built from the preliminary values of the buildings and other structures plus a separately derived land value (§ 35 (1) and (2) ImmoWertV). The building side starts from average production cost, reduced by a factor for age-related wear. A property-specific cost-method factor then brings the arithmetic result into line with what the market actually pays (§ 35 (3) ImmoWertV); without that market adjustment the method would routinely overstate value, because production cost and the price a buyer will pay can drift apart.

The cost method carries the most weight where neither sufficient comparable prices nor market-standard rental income exist, typically an individually designed house built for the owner’s own use, or a special-purpose property with no working comparison market.

The data behind it: the valuation board, standard land values, the rent index, the capitalisation rate

All three methods stand or fall on the quality of the underlying data.

• The local valuation board for property values (Gutachterausschuss) keeps the purchase-price register from every notarised land transaction and derives comparable prices, comparison factors and capitalisation rates from it.
• Standard land values (Bodenrichtwerte) are average location values per square metre for a zone of largely uniform land characteristics (§ 13 (1) and (2) ImmoWertV); for Hesse they are published through the BORIS Hessen land-value information system.
• The Frankfurt rent index supplies the local comparative rent that feeds into gross income under the income method for a rented property; details are set out in the guide to rent increases under the Frankfurt rent index.
• The capitalisation rate under § 21 ImmoWertV bundles the general state of a given sub-market into a single figure, and it is the input that moves the income method’s result the most.

Common mistakes when pricing a property

• A seller picks the method that produces the highest figure, rather than the method that actually fits the property type.
• Comparable prices from a different location or a different market phase are copied over unchecked, even though the market has moved on since.
• The standard land value is applied one-to-one to the actual plot, without adjusting for how it differs from the fictitious standard reference plot behind that figure.
• A backlog of deferred maintenance is either hidden or overstated, instead of being reflected transparently in production cost or remaining useful life.
• An asking price is derived from the owner’s own capital needs or sentimental value, rather than from what the market actually pays.
• A free online calculator stands in for an on-site inspection, even though location detail, condition and fit-out cannot be judged reliably without one.

Comparing against current listings: not an ImmoWertV method, but a useful market check

Alongside the three ImmoWertV methods, many sellers also compare their property with current listings on property portals. That comparison is not a method under the ImmoWertV; it is an additional market check outside the statutory methods. Asking prices are, as a rule, higher than the prices actually paid later, because a seller’s negotiating room is already built into them; taking them at face value overstates the price realistically achievable. A sound reading of asking prices therefore applies a negotiating discount before setting the result alongside the outcome of the three ImmoWertV methods. digo.immo’s valuation uses this listings check to supplement the recognised methods, not to replace them.

Frankfurt am Main: a tight market with wide swings by location

Frankfurt is one of Germany’s highest-demand property markets, shaped by the financial sector, its international population and steady inbound migration. Within the city, standard land values and achievable rents often differ sharply from one district or even one street to the next, and the surrounding region moves on its own patterns too. That is exactly why a flat national price per square metre rarely fits: an ImmoWertV method fed with locally accurate comparison prices, standard land values and capitalisation rates reflects the actual local market far better than a nationwide average.

The Frankfurt am Main property market report 2026 from the local valuation board shows just how wide these differences can be: in 2025, the capitalisation rate for apartment buildings used purely for housing ranged from around 2.8 percent in a very good location to around 4.3 percent in a simple or very simple location, and for condominium ownership, on average, from minus 0.5 percent to around 2.0 percent, depending on location and year of construction. Cost-method factors for detached and semi-detached houses ranged from around 0.89 to around 1.54 in 2025, depending on house type and location. A worked example in the report for the prime retail location City 1a assumes a standard land value of EUR 30,000 per square metre for a plot ratio of 5.0, while standard land values for residential development sit far lower as a rule. Figures on this scale only carry over sensibly to an actual plot once matched with locally accurate data.

What this means for pricing your own property

Anyone selling, letting, or basing a personal financial decision on a reliable figure benefits from knowing which method fits, rather than relying on a single comparable price or an automated online estimate. For a written, reasoned derivation built on these same recognised methods, with a value range and a recommended asking price for your own pricing and planning decisions, digo.immo offers a property valuation. It is not a market value determination by a certified or publicly appointed expert and is not intended for a tax office, a court or a bank.

Editorial responsibility: digo.immo Verwaltung & Invest - certified residential property manager under § 26a WEG (IHK Frankfurt), licence under § 34c GewO. About the certification

This article provides general information only and does not replace individual legal advice. It was created with AI assistance; the legal statements have been checked against the official texts of the law. Legal status: 28/09/2026; laws and case law may change. No warranty is given as to completeness, accuracy or timeliness. When in doubt, please seek qualified advice.