Why Property Valuation Is Important
If one is purchasing a home for the first time or any potential investors interested in the property, it is very important to appreciate the concept of property valuation. This concept helps in evaluating the returns one can make in the future and is so much important in real estate transactions, tax appraisals, insurance premiums, etc. There are many factors that govern property valuation such as the site, age of the property, the viability of the property, facilities, location, and many others.
What Is The Property Valuation Process?
The summary describes property valuation as identifying the factors (location, condition, and more) of a property and arriving at the estimated amount for such property. The registered valuation is done by a qualified surveyor who physically inspects the property, takes notes and photographs, and provides a valuation report afterward.
Overview Of Major Factors Involved In Property Valuation
- Location
- Number of rooms
- Total dimensions and limits of the site
- Building state
- Construction flaws
- Gardening
- Other risks and benefits.
Significance Of Valuation Of Real Estate
Equal Opportunity For Buyers And Sellers
Many people consider property valuation to be quite important. It eliminates the risk of either a homebuyer or a seller being unfairly treated in the processes of buying or selling a home. For a home owner it becomes quite a useful implement to check the level of appreciation of his property over time. It even prevents a landlord or seller from putting a price higher than the effective market value of the property. It helps an investor from buying a property at a price higher than it ought to be sold at. High pricing of the property will make the property to be for long without a buyer. Lower pricing of it will mean loss in profits.
Helps Investors Prevent Property Disputes
In India, disputes over property are quite usual. Property valuation using joint tenancy resolves property issues by ensuring that the inheritance is shared fairly. As well, it ensures property investments from dishonest and fraudulent schemes by aiding in wise selection of property investments base on appropriate market value.
How to Manage Wealth Effectively
With regard to property valuation,pay homeowners, and an evaluation will allow them to follow the increase in the value of the property over time period through regular appraisal. It is particularly important for estate and asset management since it allows a person to make wise decisions about the transmission of property to heirs and beneficiaries.
Helpful in Restoration
Building’s or property’s worth appreciates by its renovation. But to find out the actual value of a dwelling, a construction property valuer must be consulted before alteration work begins.
Property Valuation and Tax Assessment
A lot of property appraisals are used by local authorities in their calculation of property taxes. An accurate estimate of value helps ensure taxpayers owning property will pay the right tax; will not pay more or less than it is due.
Helps In Determining The Amount In Insurance
To protect your property from the risks it poses, its valuation is essential for insurance. Failing to appropriately insure a property puts one at risk when one needs to claim due to damage or loss of the property. On the other hand, aggressively over insuring a property may result in high premiums.
Paves the Way for Loan and Revaluation
Whenever you request a mortgage or refinance existing loans, lenders often demand property surveying. The valuation is used to ascertain the worth of the property being put up as collateral and the size of the loan you can get.
Aiding in the Home Loan Application-Mortgage related Perspective
Every lender needs to get the property valued before settling on the interest rate for a home loan. It also determines the various mortgage requirements that would apply.
Home Loan Application
If a buyer opts to take a mortgage loan for property purchase, the first step is for the bank to assess the property to be mortgaged. The final appraised value of the property is what determines most of the conditions of mortgage absorbing. Before granting a loan for many developments and redevelopments, the bank does a valuation to assess the viability of the project.
Factors Affecting Property Valuation
Commute
The market price of a property is to a great extent determined by the location in which the property is situated. Brokers always sell commercial buildings listed on the developed areas at a higher price than the selling price of residential properties, and freehold land properties usually sell at higher prices than leasehold land plots.
Included Policies
In fact, now it is not just electricity water and sewage that is required. Rather, those buying property want to buy more facilities such as security, swimming pools, multipurpose psychos and multi-purpose halls.
Infrastructure
As regards residents’ needs, the following factors are important: investment in infrastructure development when evaluating real property assets, presence of roads, flyovers, railway stations, airports, bus terminals, educational institutions, hospitals, entertainment places, retail markets and many others as this affects property values significantly.
Affordability
Also, affordability is one of the major contributors that has an impact on real estate properties by linking property price, rates of interest and salary level.
How to Do Property Valuation – Different Types
The land information officials or land valuers are property valuation specialists who visit the property, take the relevant information, consider different circumstances, and make a sale, lease or lodge a loan report. The following are some of the approaches a surveyor would take in performing valuation.
Sales Comparison Approach
Sales Comparison method or Market Data approach is used by valuers to examine the wide range of property in a particular area to come up with a valuation as a report for submission to the client. Real estate agents also apply this approach when they look for recently sold comparable for the purpose of estimating the price of a single family home or land.
Valuation Method of Profit
Profits from the business operations of a public property including hotels, theatres, and any similar event oriented business are capitalized at an appropriate interest rate, to evaluate worth of a property. Surgeons, for their own purposes, look at gross revenue and seek to find out the property in question’s capital value by operating expenses on this gross revenue.
Valuation Method of Cost
Constructing and acquiring a property incurs expenses which may vary from region to region and property valuers use this method to investigate on the property values in that specific region. The concept appears to focus on reconstruction cost to establish the value of the property by making a comparison whether the property under focus is a new or old building.
Valuation Method of Residual
In the real estate business, developers tend to favor a valuation method known as residual valuation which establishes the value of land or property by deducting the cost of development from the anticipated selling price or rental yield of that property in the future.
Valuation Method of Investment Approach
Investment property estimating takes into consideration the earning’s potential turnover and expected future appreciation of the property, cash flows, future appreciation along with expenses incurred in order to find out the worth of such a property to an investor.
Types of Property Valuation
Market Value
Market value, as one would describe it, is achieved when a buyer buys and a seller sells having willingly agreed on a price, say for example, in the open market. This value takes into account comparable sales, property condition, location and the market at any given time.
Investment Value
Investment value aids in the analysis of the expected outcome of the investment property, which features investors focusing on selling or purchasing income generating properties. Cash flows, expenses, and the anticipated appreciation of the property are the most important factors.
Insurance Value
Insurance valuation is the method of assessing property for adequate insurance, that is assessing the value necessary to replace a property in the event of damage, destruction or loss, such as construction materials, labor, and other factors.
Tax Value
There may be other methods of property taxation appraisal suitable for certain tax laws that differ from the concept of market value. This method is mainly use to derive the property assessment for tax purposes.
Conclusion
At Dream Location, we focus on thoroughness and integrity. The true market value of our high-end flats and apartments is revealed only after due measures of property assessment. As such, if you are about to purchase a new apartment or appraise the existing one, understanding the value of your investment can be an advantage. Having true and correct valuations from certified surveyors means you are ready to go to the property market knowing that your ideal site is definite.
For more information about Dream Location and to search your dream property, please visit Dream Location on Google Map. Contact us today to know more about the best real estate deals in Delhi and North India; we will connect you to the right property investment.