In real estate, property valuation is essential. Without it, sellers have no idea what their assets are worth, and banks don’t know how much they should loan.
Learning how to value a property, therefore, is essential. If you can get it right, you can ensure that you get paid fair value, or better, in any transaction.
Use An Online Valuation Tool
Perhaps the simplest approach is to use an online valuation tool. These collect data from across the web to determine the price of properties in a given area. They use property records from Public data banks such as tax assessments, deeds of ownership, and Property transfers.
Get A Comparative Market Analysis
Comparative market analyses are not as detailed as professional appraisals. However, they can provide you with a good evaluation of what your property is worth. People typically use them for listing purposes.
Use An Expert Witness
You can also use an expert witness to testify about your property’s value. Expert witnesses tend to be good in cases when you are trying to value a non-standard property.
It can be quite difficult in some situations to determine the value of a piece of infrastructure, for example. Because markets for these properties are thin, it is often difficult to know no how much they are worth. Traditional calculators will not provide you with a realistic value.
Witnesses on the other hand have experience in these matters and can draw comparisons with previous cases. This way, you get the best possible valuation for your property that is fair for both buyer and seller.
Use A Home Price Index
You can also use a home price index to work out the value of your property based on previous prices, adjusted for the rate of inflation. Cleverly, these indices also adjust for seasonal changes in house prices. This way you can improve your estimate significantly over a traditional inflation deflating tool.
Compare Your Property To Other Properties In Your Neighbourhood
Perhaps the simplest approach to valuing a property is to compare it to other properties in your neighbourhood. In the industry professionals often call these “comps.” Comps are actually a large section of the property market. Estimates suggest that comparable properties make up nearly half of the US property market.
To take advantage of these properties, try to find similar real estate in your area that allows you to make an apples to apples comparison. Look for houses with a similar size, location, upgrades, and condition.
If you are struggling to get started, look at sites with MLS listings. check for recent prices of comparable properties in your vicinity. When you are collecting properties, you will need a range of at least 3 to get an accurate estimate for the market value of your house. Then, start adjusting the price of the properties so that they compare to yours. For instance, you might subtract a certain value from the home if it has fewer bedrooms than yours.
In summary, valuing your home is very important. It allows you to price your property appropriately and sell it to the market for the best price.