Know The Prospective Of The Valuation Of The Property
The real estate and property market is the most dynamic and thriving market around the world. With increasing population and space crunch and other external factors, the property values also experience their highs and lows. There are a few ways to go when it comes to evaluating a property. No matter if you are the buyer or the seller, knowing the right price of the property through a property valuation will help you make an informed decision. For investors, this holds even more strongly as being one, you would only invest when it is profitable.
Generally, the value of a property depends upon
- If it is for commercial or residential purpose,
- Its location,
- Land availability,
- In house facilities or amenities,
- Infrastructure and design,
- Disposable income
Most importantly the price fluctuates based on demand and supply. It is one of the key elements that run the economy. Say in a particular year, new real-estate projects take place, there will be more property available in the market, pumping up the supply side. Hence, the price will fall slightly. Lower interest rates on housing loans will boost up the demand. Both the factors work in opposition until the price reaches equilibrium.
Being an Investor:
There are a few dos and don’ts that one needs to follow when investing in a property, says RentEasy, property management specialists. Do not blindly go by the appraiser’s words before researching the market yourself. Here are some tips that you must follow to estimate the correct value.
- Inspect the property personally – You can hire a professional property valuer to do this job but you also need to be present yourself to check the conditions of the property and how much you will have to spend on the renovation. An old property would require a higher maintenance cost.
- Check the neighbourhood – Are there more residential buildings or commercial buildings? Here you can go with the ‘cost approach’. Depending on the surroundings, you will determine what can be the best use of the property or land and estimate a value based on this information.
- Compare the price with other similar properties in the neighbourhood. This is a ‘market approach’. Based on this, the capitalization rate of a building can be estimated. It is the rate of return on a real estate for net operating income. This method is extensively in commercial properties.
- If it is a land that you are looking at, estimate the cost of construction of a building on that land with the help of a professional. The price should be per sq feet.
Being a Seller:
Selling a property takes months and getting a good price is a challenge. Here are some tips that you must follow to get the maximum value of your property.
- Keep it clean, put up a good show. A dull and dirty building is an eyesore that will not attract too many buyers. Keep the areas in and around the building, tidy and pleasant looking. Clean the bathrooms and kitchen. These are the two areas that create an impact. Buyers will be willing to pay for a well-maintained property.
- Get a print of your building plan and other documentation that will help in real estate valuation. A legal certificate stating true property worth will cut out the scope of bargaining.
- If you have recently done any renovation then that’s a plus. That will increase your property value.
- Amenities like pool, home theatre, bar, or a patio will drastically enhance property value.
- Do not hold too high expectations or do not undervalue your property. You have to be aware of the housing market prices and the market value of your nearby properties on sale. The potential price of your property will greatly depend on that.
- Know about the recent developments in the nearby area. Say a metro station construction is on its way that is only 3km from your property location. Or a hospital is at proximity. That will automatically raise your property value.
There are many other technical concepts to be taken under consideration for the valuation of property or land like capital asset pricing, benchmark price, gross rent multiplier, and so on. A serious investor will go through every possible component before investing. These tips give you the basic idea before you dig in deep.