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Real Estate Concepts: Valuation Methods, Market Approach, and More

Real EstateIt’s a sad reality that you will need other people to determine the value of your home when you put it up for sale. Your perceived price point may be way higher than the actual value. It’s not surprising that you feel hesitant to have a valuer estimate the price of your property.

However, Paul Boudier and Associates says the correct estimation of a property’s value is critical in the industry because it’s what determines whether you’re going to make a sale or not. There are factors every professional valuer takes into account: financing options, listing comparisons, investment parameters, property insurance, and taxes.

Without the right information about these matters, selling your home would be unlikely.

Conceptual Analysis and Evaluation in Pricing

Every good analyst looks at properties in both the present and future tenses. By carefully evaluating the present value and future worth of a property, they can create reasonable prices that work. Unlike self-initiated appraisals that require homeowners to look at their past investments on the estate, valuers look at what else they can do. The standard elements in the valuation process involve the following:

  • Market appreciation — the popularity of the property, its location, and the kind of neighborhood
  • Functionality — how the property satisfies the future owner’s requirements
  • Distinction — how unique or customized a property is; the rarity of the architecture and engineering against other competing properties
  • Financing options — the mode of property transfer, payment options, and existing terms.

Approach Type

Before the valuer visits the property, you should determine what type of approach you want to have: comparison, cost, or income-generation. For the comparison, the valuer will simply gather information about your competing market and place your pricing at the average. The cost approach would reflect your total investments on the property. The income-generation determines the potential value of key properties.

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Real estate valuation matters to the homeowner, realtor, mortgage lenders, investors, insurance companies, and the prospects. The better valuation structure you have, the higher the chances of sales.

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