Which key factors impact the value of a property? If you want to learn more about property valuation, then keep on reading this article till the end.
The real estate market is among the most lucrative investment avenues in most parts of the world. Property prices tend to increase constantly and that allows for very high capital gains for mid-term as well as long-term investors.
If you are someone who is just starting out in the real estate business, then it is better that you know all the factors that can influence the true value of a property. These factors will help you evaluate whether a certain property investment will help you meet your profit goals or not.
But before we look into these factors, let’s first discuss what property evaluation is and why is it so important.
What is Property Valuation?
Dubai property valuation is a process wherein an expert makes a thorough assessment regarding the value of your property based on several key factors like condition, location, facilities, and future considerations.
Property evaluation helps you determine the most accurate price for a property that you want to invest in or sell.
Importance of Property Valuation
If you are really looking to get the best real estate deal, then it is extremely important that you know the exact value of a property based on certain factors.
Property valuation helps both buyers as well as sellers to figure out what is a certain property worth. This can speed up the buying/selling process and give you an opportunity to cease the best possible deal.
Key Factors That Impact Property Valuation
The location of a property affects things like accessibility of major facilities, commute time, and distance from places like parks, schools, major landmarks, etc. The properties that offer all these facilities are more expensive which is usually the case in city centers.
The location of the property thus plays a key role in determining its value and that is why every investor needs to consider this factor.
The current state and age of the property are also quite important in determining its value. Newer properties do not require a lot of renovations or repairs which means the buyers are willing to pay more for these.
Apart from age, properties that are in a good state, even if they are older, can be quite expensive as well. So, consider the condition of a property and potential repair costs before making a deal.
The price of a real estate property is given in price per square foot. This is obtained by dividing the total sales price by the property’s square footage. For example, if a 1500-square-foot property is sold for $300,000 then the price per square foot for this would be $200.
Places like garages, attics, basements, etc., are not included when calculating the usable square footage.
Availability of Facilities
Facilities are treated as USPs or unique selling points for any modern property. If a property has facilities like standby power supply, elevators, safe parking space, continuous water supply, fitness centers, parks, etc., it automatically becomes more expensive.
This is why the availability of all the essential facilities can significantly impact the price of any house or commercial building.
Real Estate Trends
Real estate trends are also a governing factor that affects the price valuation to a great extent. If a certain type of property is suddenly high in demand, its prices will go up due to scarcity of the said property.
So, in order to stay on top of everything, you need to educate yourself about all the recent real estate trends. This way, you will be able to find the most profitable deals in less time and with less effort.
Factors like disposable income levels of the population, unemployment rate, poverty index, GDP, etc., are major indicators that show how well the economy of a certain country is doing.
If a country is doing well economically, this means people have more buying power and that affects the demand as well as the prices of the property. Thus, consider the prevailing economic conditions of the area before you go ahead and make an investment.
Higher interest rates mean more lenders will follow suit and that will affect how much borrowers pay in terms of monthly mortgage payments. More mortgage means a higher price of the property. This is why always look at the current interest rates before you buy or sell a certain property.
The Comp Set
The comp set allows you to find the current value of your property by comparing it with some other similar property in your area. For comparison, things like the age, type of property, location, number of rooms, facilities, etc., are usually considered.
So, these are some of the most important factors that can affect the price of a certain property in your region. All these factors allow you to figure out what a property is worth and whether it has the potential to generate more profit for you or not. We are certain that if you consider these few points, you will soon be able to reach a risk-free and profitable decision in terms of buying or selling your property.
We really hope you have found this information useful and we wish you the best in your every future property investment.