If you are looking to buy a property for either for use or for sale, you have to be aware of the importance of getting the highest possible value for the price you are paying and the highest price for the value you are providing.
The value of any property you buy is not necessarily related to the price you have to pay for that property.
The market value is simply the price a willing buyer would readily pay and a willing seller would readily accept for a piece of property on the open market, when they know all about the building and there is no other situation prompting sale or purchase of the building. The market value of any property tends to differ from the price of the property sometimes.
It is therefore, important to rightly assess the market value of your property or the property you aim to acquire, so as to ensure that you are getting a fair deal and if possible are actually profiting.
Therefore, if you are planning to sell that property, or are looking to buy it, here are some ways to make sure that the price correlates with the market value:
#1. Compile the Cost
This is known by real estate experts as the ‘Cost Approach’. This involves compiling the cost ensued whilst developing that property (i.e. the amount paid to build, to furnish, do plumbing, etc) and subtracting the cost of anything that depreciates it (i.e. subtract the cost of replacing the wiring if the wiring is faulty). By doing this you are able to get an amount that you shouldn’t sell below if you are hoping to sell, and shouldn’t pay above if you are hoping to buy the property.
#2. Compare Prices
This is also known as the “Sales comparison approach”. This involves doing some research. Here you compare the prices of properties that are as similar as possible to the one you want to buy or sell. Alternatively, if the building has been sold multiple times and you are selling, you can also compare the prices for which it was sold over time. The average of the prices will give you an idea of the market value of the property.
Understanding how to assess the value of any property you hope to sell or buy, would help to ensure you are treated fairly. If all the work seems too much for you, be sure to enlist the help of a real estate agent whilst doing your own research. That way, you are able to get more than one opinion and choose wisely.