Property Valuation is an important element of the real estate market that seems to be underestimated for as long as we can remember. While both buyers and sellers do sufficient research and ensure that they leave no page unturned, property valuation is often missing in the components of the research.
However, no one is at fault here. While some feel it is wise to figure out the value of their property sometime in the future, others simply do not see this task as important or even needed.
Believe it or not, determining the value of your property is as important as any other element of the real estate industry. Property values are changing continuously and are never constant. Knowing this value for your property will not only give you an upper hand over the changing conditions but will also prepare you for the rough times. If you are one of those who considers the financial component of real estate as important, add property valuation to this list!
We want to back up what we said with proof. Before you move on to understanding the factors that can help you figure out the value of your property, we want you to be certain that property valuation is indeed essential. The factors listed below will make you realize that whether you are a buyer or a seller, property valuation is one common thing that will take you a long way if done right.
Also Read: Guide Property Valuation
What is the Importance of Property Valuation?
1. Financial Planning
Planning your finances is always a big deal and one of the major decisions of your life. When you factor in different elements while budgeting and thinking about the future, knowing the value of your property should be given priority. Whether you are just taking note or doing it to talk to a bank, the market value of your property is a must. It is all the more important if you are planning to upgrade or downsize the property.
2. During Selling
Don’t you want the best deal for your property once you finally find a buyer to sell it to? If you don’t figure out its market value, you will know the best deal you can get. On the other hand, if you price property too high then it might not sell at all. Selling is a huge responsibility and you should also take a professional’s opinion in determining the value of your property.
3. While Buying
It does not matter if you are buying property for the very first time or have been in the business for a while now; knowing the worth of the property is always essential. Neglecting the property value might lead you to pay more money than it was worth.
4. Insurance
If you have a house, you have insurance. There are a lot of factors that go into choosing suitable insurance for your property and knowing its market value is one of them.
Also Read: Difference Between Market Value And Fair Value
5. Retirement
When it is finally time to retire and enter the golden years of your life, you would want to know your biggest assets and the value they hold. This includes your property. Knowing the value will help you plan for the future and make wise financial decisions.
6. Renovation
When it is finally time for you to sell your home, you would assume that renovating the house and getting a few upgrades will get you a better deal. However, this is a misconception. The nature of your renovation and the value of the property needs to go hand in hand. Without knowing its value, you may end up either renovating more than required or not doing enough.
7. Property Tax
If you do not know the property value, you will either end up under or overvaluing it. Undervaluing it may lead to you paying fines in the future and overvaluing it would mean you are paying extra money for no reason. Remember that determining the value of your property requires you to consider the current market trends.
Is our emphasis on how important property valuation is any clearer now? If it is, you are ready to take the next step! Once you know the importance of this concept, you would want to determine the value of your property or any property that matters to you in any way. Being aware of various factors that play a role in determining property value will further help you predict the price of the property at a specific point in time. Moreover, since the market and the values are always changing, it is the factors that remain constant.
What are the Factors that Affect Property Valuation?
1. Location
We all know that the right location has always been a common factor in any discussion related to the real estate industry. While the preferences for location keep changing, the ongoing pandemic has probably resulted in the biggest transition in what people now prefer in terms of location. People now prefer to find properties in suburban areas rather than big busy cities. Properties in locations that have a high-quality standard of living and a lot of options for entertainment purposes will have a higher value. On the other hand, locations, where there is unemployment and high crime rates, will be on the lower side.
Also Read: How To Ensure Investment In The Right Property Within a Decided Budget
2. Supply and Demand
Don’t worry, you won’t have to use too much economics to understand this - just the basics! It is pretty simple and easy to figure out. When there is increased demand for housing, your property will automatically be of greater value. However, when there is increased supply, the value will reduce. The reason for this is that if there are sufficient properties available, your property won't be as valuable anymore.
3. Amenities
Just a property is not enough these days. Buyers require facilities that will let them improve their standard of living and give them something to look forward to. Amenities like a swimming pool, gym, parks for children, and community halls are common these days.
4. Condition
You need to make sure your property is well maintained from the very beginning. Apart from keeping it fully ventilated, ensure there are no issues with maintenance or need for any repair work. Homes that have ample light and air coming in are always more appealing. After all, who would value a property that is claustrophobic and needs a lot of repairs?
5. Similar Comparable Properties
Of course, you will have competition. During your research, figure out the properties that you can compare your property with and reflect on your position. Use this as your criteria -
- Year of construction
- Size of property
- Number of bedrooms and bathrooms
- Amenities
- Location and Connectivity
6. Renovation Potential
Anyone taking ownership of your property would like to have things customized their way. Is your house capable of handling some major renovations? These can include adding a bedroom or two, wanting to construct a swimming pool or a patio, or even adding an extra floor to the property.
7. Accessibility
Even if your property is top-notch and ticks all the boxes, it will have no value if it is not well connected to routine facilities that individuals prefer. Check and see if your property is nearby some shopping centers, educational institutions, or healthcare centers. Easy access to public transport is also a criterion.
Also Read: Factors To Help You Determine Right Property Price
8. Property Market Performance
Is real estate of importance in the locality or city where your property is situated? Values will fall if not many people are looking for housing and prices of other well-maintained location preferences properties are not too high.
If you have ever played an active role in the real estate sector, you would know that this is one industry that is always evolving and incorporating various changes within the market. In this ever-changing environment, you need to know which information is a must and which can be consciously avoided.
Accuracy is another component of property valuation. While you can never be 100% accurate, you need to make sure that you are doing your research and making sure that all factors have been taken into consideration. If you include some, and forget some - you are only making way for inaccuracies. If you have the wrong property value in mind, you are going to head down a road that will ultimately lead to losses for you. The solution to this is to take all factors into account and then calculate.
At the end of the day, the concept of property valuation is important to investors, buyers, sellers, insurers, mortgage lenders, banks, and even landlords. Whether you are a first-time homebuyer or a skilled professional, make sure you are familiar with determining and figuring out the value of any property that comes your way.