When it comes to real estate valuation, the first thing that comes to a real estate investor’s mind is how much money he/she should pay for a certain real estate property. Setting up the price of a real estate property is called property valuation, or real estate appraisal.
How do you regulate the investment value of real estate? Well, it’s an art. It’s not like valuing a house in which you are going to live. That would be the homeowner's value. When estimating a property’s valuation, there are a variety of real estate valuation methods that you can try.
The Income Approach
The Sales Comparison Approach
The Cost Approach
Helping yourself with the way of determining real estate valuation is a perfect road to walk in, but when you are in a dilemma, you can contact the best real estate agents in Wanneroo to help you in property valuation.
Keeping in mind, there are no right or wrong valuation methods. Successful Wanneroo real estate agents, like professionals, understand each system, so they’re able to communicate with many different buyers and many different sellers in many different situations.
What to know about REAL ESTATE VALUATION?
Real estate valuation is important to property sellers, property buyers, and real estate investors in order to determine the asking or purchase price of a real estate property. Real estate valuation, or real estate appraisal, is the process which determines the economic value of a real estate property.
The process is not as easy as it seems to be because unlike other transactions, such as stocks and shares, real estate transactions do not occur frequently and are unique in their nature. Therefore, the process of developing an opinion about the value of the real estate property is required.
Basic real estate valuation concepts
VALUE
Technically speaking, a property's value is defined as the present worth of future benefits arising from the ownership of the property. The benefits of real and genuine property are generally realized over a long period of time.
Therefore, we must have an estimate of a property's value considering economic and social trends, as well as governmental controls and environmental conditions that may influence the main elements of value:
Demand: It is the desire or need for ownership supported by the financial means
Utility: It is the ability to satisfy future owner’s desires and needs
Scarcity: This means the finite supply of competing properties
Transferability: It is the ease with which ownership rights are transferred
VALUE vs COST & PRICE
Value is not comparable to cost or price. Cost refers to the actual expenditures on materials, as like, labor. Price, on the other hand, is the amount that someone pays for something.
The cost and price can affect the value, but they do not determine value. The sales price of a house might be some amount, but the value could be significantly higher or lower. For example, if a new owner finds some serious issues in the house, such as a faulty foundation, the value of the house could be lower than the price.
MARKET VALUE
A real estate valuation is an opinion or estimate regarding the value of a particular property as of a specific date. Valuation reports are used by businesses, government agencies, individuals, investors, and mortgage companies when making some valuable decisions regarding real estate transactions.
Market price, the actual selling price of property, may not always focus on the market value. For example, if a seller is under stress because of the threat of foreclosure, or if a private sale is held, the property goes down by its market value.
The Bottom Line
Accurate real estate valuation is important to investors, insurers and buyers, and sellers of real property. While valuations are generally performed by skilled professionals, anyone involved in a real transaction can benefit from gaining a basic understanding of the different methods of real estate valuation.
Best real estate agents in Wanneroo, Professionals agency helps in choosing the best method depending on the type and use of property and the availability of information and that’s why they are known as best Wanneroo real estate agents.
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