Buying and selling a property can be a real headache, especially if you don’t know what to do. You have not decided on the right value of your property. Do you think that it is too pricey or too inexpensive for your property? Well, nobody can estimate a good deal of property unless it undergoes property valuation.
The free property valuation hong kong can estimate the real estate value necessary for different factors, including:
- financing
- sales listing
- investment analysis
- property insurance
- taxation
However, most people determine by asking the purchase price of the real property; these are the most useful applications for property valuation.
The basic valuation concepts
Technically, the value of a property is defined as the present worth of future benefits that arise from the ownership of the property. Unlike consumer goods that are quickly used, the real property’s benefits are realized over time. Thus, the property’s value estimation considers the four aspects:
- economic
- social trends
- governmental controls or regulations
- environmental conditions
All these will influence four elements of value:
- Demand. It is the desire or need for ownership backed by financial means to meet the desire.
- Utility. It is the ability to satisfy future owners’ wants and needs
- Scarcity. It is the limited supply of competing properties
- Transferability. It is the ease with which ownership rights will be transferred.
Cost and price versus value
The value is not necessarily the same as price or cost. The cost is the actual expenditures of the following:
- Labour
- Price
While the cost and price influence the value, they don’t determine value. The house’s sale price can be 150,000, but the value can be lower or higher. For example, if the new owner finds a severe flaw in the building like a faulty foundation, the house’s value changes to lower than its price. A property valuer can also suggest some modifications like doing home staging or anything that can help to come up higher value than usual.
But, it is always up to the owner of the house whether it agrees with the suggestion or not. In the market price, the selling price of the property may not always represent the market value. For instance, if the seller is under duress because of the foreclosure threat or if a private sale is held, the house may see a lower price than its market value.
The appraisal methods
The accurate appraisal will depend on the methodical data collection. The specific data will cover the details about the property and the general data that pertains to the following:
- Nation
- Region
- City
- Neighbourhood
These must be the details of the property where located, data will be collected and analyzed to meet a value. The appraisals use 3 basic approaches to determine the value of the property, namely:
- Sales comparison approach
- Cost Approach
- Income capitalization approach
Accurate property valuation is essential to mortgage lenders, investors, and some other groups of people dealing with properties. Appraisals are performed by skilled professionals and anyone involved in the real transaction benefits from gaining a basic understanding of different methods of real estate valuation.
