It may be quite difficult to gauge the true market worth of real estate, regardless of whether you are considering purchasing it or selling it.
You need to perform careful calculations and arrive at a reasonable valuation that both the market can bear and that won’t force you to sell the property at a price that will result in a loss for you.
In this blog, we bring you a detailed overview of the home valuation process and how you can determine the worth of your property.
So, let’s get started!
Why is Property Valuation Important?
When valuing a property, recent sales of comparable homes in the neighborhood are one of the most important factors considered.
The identical number of bedrooms, amount of square feet, and overall size of the property are among the distinguishing characteristics of these homes.
The worth of your home is determined by real estate professionals who examine all of the aspects that make it comparable to recently sold homes, as well as those that set it apart from the other homes on the market.
The following factors play a crucial role in the valuation of your property.
Fair market value: The concept of “fair market value” refers to the price at which a property may be sold on the open market based on how it compares to the prices of other properties in the same neighborhood.
Take into account the selling price of a property that is comparable to yours (the same number of bedrooms and bathrooms, square footage, or outdoor space, say).
If you hire a real estate agent to assist you with the sale of your house, the first thing the agent will do is investigate similar sales in the area to determine the prices that purchasers have been ready to pay for properties that are analogous to yours.
Assessed value: The assessed value of your house is different from the fair market value, despite the fact that it is included in comparable sales data.
An accredited appraiser will take into account the location, size, and condition of your house, as well as any changes that you have carried out when determining the worth of your property.
When a borrower purchases a property or refinances their mortgage, mortgage lenders look at the appraised value to determine how much they will offer the borrower.
Things to Consider During the Home Valuation Process
Consider the following things to determine the value of your property.
- Internet is your savior:
Internet research is one of the easiest ways to get an accurate estimate of the worth of a house. This choice is made by a good number of dealers, builders, and sellers.
One is able to view images of the property, both inside and out, along with information on the location, the size of the home, the number of rooms, and other relevant details.
- Make sure of property portals:
In Pakistan, certain real estate websites also post on their websites details about recently sold homes. Before you make any phone calls or go to any offices, you should perform a search online first. This is a fantastic initial step to take.
This way, you won’t have to put yourself through a lot of unnecessary hassle just to obtain an idea of the information that is accessible. These internet portals act as a middleman between buyers and sellers and provide information on property prices.
In addition, they provide buyers and sellers with pricing data. Take, for example, Graana.com, Pakistan’s first online marketplace is known among the masses for its professionalism, transparency, and secure procedures.
For instance, you want to know the valuation of a house for sale in E-11, Islamabad. Simply visit Graana.com and explore the listings to get a fair idea about the area under consideration.
- Competitive analysis:
If you are planning to sell your home, most real estate agents will provide you with a complimentary comparative market analysis (CMA) in the event that they want to earn your business.
In order to finish the CMA, the realtor gathers information on recent sales of comparable properties in the neighborhood.
They will then make an assessment of the worth of your property based on their familiarity with the surrounding area as well as any unique aspects of your home. This similar service might also be provided by a buyer’s agent for any property on which a buyer is interested in making an offer.
An experienced agent monitors the market, examines the state of the property, and is familiar with the surrounding community, all while making decisions based on their knowledge and the facts at their disposal.
On the other hand, it must also be kept in mind that various real estate agents may utilize different data points or have contrasting ideas on the worth of your house. In addition, the estimate won’t be as accurate if there haven’t been many sales in the area or if the comparable properties aren’t that similar to your own home.
- See similar properties:
Getting comparable sales prices is one approach to figuring out the worth of a property without having to hire an appraiser, but you need to apply your best judgment.
To pick appropriate comparisons, you must apply a proper and well-structured strategy. Consider the alternatives that a potential buyer could look into if the property you’re selling isn’t available.
Look for properties that are comparable in terms of size, location, condition, and improvements.
Visit a website that features listings to obtain the most up-to-date information on the prices at which comparable homes in your area have recently changed hands.
If there aren’t enough recent sales, you may look at the listing prices instead; but keep in mind that such prices might not be accurate.
If you want to come up with a plausible range of market value for your house, you’ll need to look at at least three comparable homes. After you have selected qualities that are equivalent to one another, the situation becomes more complicated.
You will need to make adjustments to account for the variations between your home and the comparable properties, such as increasing the price of a comparable property if it has a larger number of bedrooms than your home or decreasing the price of a comparable property if its interior is antiquated.
The conditions in your market might vary greatly, which means that the amount that you add or withdraw is dependent on those changes.
Examine your top and lowest comparables once you have adjusted the settings. Your house probably has a value that falls somewhere in the middle of the spectrum.
- Get an appraiser:
When someone is purchasing a property, the bank often needs them to obtain an appraisal at some point before the underwriting process of the loan can be completed.
You are not compelled to have an appraisal as the seller, but it may be a good idea if you don’t want there to be any second-guessing about the worth of your house when you are ready to market it for sale.
It is the responsibility of the appraiser to present a valuation that is objective and based on an extensive investigation into the subject property.
They accomplish this by physically going to the property and looking at comparable homes that have previously sold or are now up for sale.
Some of the things an appraiser look for are:
- Location of the house in the neighborhood.
- Whether or whether the house is located in a flood zone.
- The state in which the property’s various utility services and fixtures are located.
- When the house was constructed, the kind of foundation that was used
- The state of the attic and basement, as well as the heating and air conditioning systems, walls, windows, and doors.
- Whether the house has any facilities, such as a fireplace, a terrace, or a swimming pool.
- Any structural enhancements or repairs that have already been completed Determine if any further structural enhancements or repairs are required
- The state of any and all household appliances, including their warranties.
An appraiser would also take into consideration the home’s previous sales history as well as an estimate of how much it would cost to replace the house if it were completely destroyed.
This report would serve as a guide for the appraiser.
There is no one way of estimating the value of a home that can be absolutely certain of its results. Because of this, utilizing a variety of sites can assist in providing you with a viewpoint that is more educated on the value of your house.
You may, for instance, obtain a complimentary CMA and carry out your own study by employing the services of an online home value estimator.
If you take the final figures that you’ve gathered and average them together, you can obtain a more realistic image of the value of your property.
However, in the end, the most trustworthy estimates of house value come from specialists who take the time to properly evaluate your property based on a range of variables.
All of the assessment methods are valuable in giving a sense of the worth of your house but the most accurate sources for assessing value will be an appraiser and/or an experienced realtor.
Because a machine is unable to assess intrinsic worth or take into account the state of your home or the modifications you have made to it, a qualified professional will have an edge in the evaluation process.