Before buying any property, the investor wishes to know how much it is worth in the financial market. If you don’t know the market value of a property, you can easily get wooed by the retailer. It is determined by the seller and the buyer after analysing the property. In this article, you will get to know how to determine the market value in real estate and the factors to keep in mind while determining the value.
What is market value?
Market value is the real value of the property when opened for sale in the market. It is the amount that the buyer is willing to pay for the property keeping other aspects in mind such as location, facilities, etc.
While estimating the market value, the comparable sales of other properties are also considered which is similar to the current selling property. Market value is quite different from market price as it can be more or less than the market value. It entirely depends on the retailer. He can sell the property either on the market value or lesser than that. If, in case, the broker is in a hurry to sell the property, the price gets lower than the market value.
Points to remember during the valuation.
1. Location of the equity
Location is the key factor that estimates the net worth of the property. The development of the locality also adds to it. For instance, a small piece of property in a well-developed locality is worth more than a large piece of property in a less developed area.
2. Quality of the building
It’s the second factor that determines the value of the property. The value increases if the builder uses good quality material in constructing the building. In the same area, a building will cost much higher if it is made up of high-quality material as compared to the building made of average quality material.
3. Age of the property
Age is also an important factor. Anyone would prefer to buy new construction with better furnishing than the older one. That is the reason why older buildings are priced less than new ones.
4. Builder brand
The builder brand also impacts the property. Construction done by a well-reputed constructor would cost much higher than any other less reputed builder brand.
How to determine the market value of a property?
1. Supply and demand
We know the fact that the price of everything depends on its supply and demand. The relationship between supply and demand affects prices.
- Supply increases, the price goes down.
- When demand increases, the price goes up.
- If supply decreases, the price goes up.
- If the value and demand of a property are going up, there is an increment in the prices.
2. Comparable properties
To determine the market value of a property, you need to compare it with similar sold properties( number of bedrooms, square feet, bathrooms, same locality, age, and style of home). The furnishing and repair work is also considered while calculating the market value.
Other aspects to consider are:
Location, Age, The interior of the home,
Garage, carports, decks, number of parking stalls, etc.Upgrades and renovations
3. Analyse the market
You can ask a local estate agent for a comparative market analysis of your property. CMA provides an estimate of value just for the listing purpose. The agent provides the comparative market analysis for free or at a low price.
4. Try the House Price Index Calculator
This tool uses the “repeat sales method”. It tracks the change in value from one sale to the other. The market value keeps on varying and is not consistent. HPI calculator lets you know how much your property has been liked by buyers over time, so you can increase the price.
5. Employ a professional appraiser
The appraiser’s work is to give the price according to the needs of the client. You can employ an appraiser to determine the home value at any time. It makes your work easier.
Among other aspects, appraisers check :
- Market: The area and the locality of the property.
- Standard of the house: rooms, parking slots, age, size, and the interior.
- Comparable property.
Doesn’t matter how you value a property. In the end, the price is always negotiated between the buyer and the seller. Both the parties try their best to get the deal in their favour. In the end, the deal is closed by a little compromise by both the parties as no one wants their loss.
Frequently asked questions
Why is market value important?
Market value tells you the true value of your property after evaluating all the required aspects.
Is market value equal to selling price?
It entirely depends on the seller. He can price the company at lower or exactly at the market value.
Can you sell a property at a price higher than market value?
Yes, it completely depends on the seller as the market value is negotiable.
Why is it important to know the market value of any property?
The market value is important for the buyer as it can handle all the concerns they might have regarding the property.
What factors determine the market value of the property?
The locality, age, size, and other facilities such as terraces, garage, parking slots, and many more.
Are market value and market price the same?
No, there is a major difference between both terms. The market price is the amount you pay for the property, and the market value is the real value of the asset.
What is the most important factor that affects the market value?
Supply and demand
How to know your property has increased in value?
You can try the house price index calculator, appoint a professional appraiser or even check on the municipal auditor website.
Is market value negotiable?
Yes, the market value is negotiable, and in the end, both the parties close the deal by some compromisation if possible.