5 Things You Need to Know About Property Valuation
When you invest in stocks, you look at the long term return on investment and various factors such as the price per earnings ratio. When you invest in gold and silver, you look at the growth rate and try to understand the future trend. And, when you invest in real estate, you use property valuation as a benchmark to understand just how much this property is worth and how much it could be worth in the future. Be it first time buyers or real estate investors, be it Estate agents in Cheltenham or real Estate agents in Charlton Kings, every single person who is in the real estate sector will recommend getting a property valuation done before purchasing any real estate. Keeping that in mind, here are five things that you need to know about property valuation.
Property valuation is not an exact science
Property valuations are subjective in nature. Unlike making a molecule of water or making the perfect chocolate cake, there are so exact figures when it comes to property valuation. Since property valuation is done by humans, you cannot expect every property valuation to have the same result. Human’s have their biases and every human being has a different thought process, which means every property evaluator will assess the property with a different viewpoint.
Property valuation depends on various factors
There is no single factor that determines the value of the property. From the age of the building to the location of the property, everything contributes to the valuation of the property. Even physical features such as the size of the lot, the number of rooms, the square footage of the property, the built-up area, the quality of construction as well as landscaping play a role in property valuation. Apart from these factors, additional amenities such as hardwood floors, marble counters, a swimming pool, a garage, a fireplace and even central air conditioning can really change the value of a property.
Property valuation is usually comparative
In order to evaluate property, estate agents and property valuation experts usually compare properties. They will compare the current property with at least three to four properties that have similar characteristics. Also, these comparable properties are usually sold in the last few months, a maximum of six months and nothing more. Also, these properties are either in the same neighbourhood or similar neighbourhoods. Once the evaluators reach an average valuation, they add or subtract to that valuation based on the features and characteristics of the house to finally give the buyer or seller an accurate property valuation.
Property valuation is not the same as the buying or selling price
When you ask a property evaluator or a real estate agent to assess the value of a certain property, it does not necessarily mean that the property will sell for that exact value. During distress sales and hardcore negotiations, properties sell for a much lower price than the valuation. On the other hand, if the demand for property in the area increases or the average price of property in the area goes up, sellers can sell the property for a price that is much higher than the predicted valuation. Keep in mind, property valuation is just an assessment of how much a seller could sell his or her property or how much a potential buyer could buy a new property for. It basically helps a buyer understand how much he or she should quote for a potential property and allows the seller to understand what the selling price should be for the property. In no way is a property valuation the exact determinant of the final sale or purchase value.
Property valuation depends on the location
The location of the property plays a big role in determining the value of a property. Say there is a four-bedroom home in the city centre and a four-bedroom house in the suburb. Without a doubt, the four-bedroom house in the city centre will cost a lot more money than the four-bedroom property in the suburb. Similarly, properties in metropolitan cities will be more costly than properties in smaller towns and cities. Even properties that are in commercial areas or business hubs will be more expensive than properties on the outskirts.
So, if you are looking for Property for sale in Cheltenham , or anywhere in the UK, make sure to hire a professional property evaluator to find out the value of the property. However, you always need to keep in mind that the valuation is just an approximate figure, not a definitive one.