Factors That Influence Property Value
A property’s value does escalate if it’s in “perfect condition”. Additionally, the value can spiral down if the property’s value is not appreciated.
Victor Kiplagat
A property’s value does escalate if it’s in “perfect condition”. Additionally, the value can spiral down if the property’s value is not appreciated.
These factors are a pointer to determining the investment property’s worth. In other words, “Is my home worth an expensive sale?” The factors include the following:
Location
The rule of thumb here is that if the property is in a prime location, it will sell. On the contrary, if the neighborhood has poor security, potential investors won’t consider the home as a residential option.
If the property has a great level of proximity to amenities such as restaurants, schools, malls, public transportation, and hospitals then the property’s value will be stable or increase. These amenities should be available and accessible.
Home size and usable space
A home’s worth is measured in square feet. For instance, in the United States, 1,500 square foot homes sold for $300,000. In determining the types of home size, understand well the types of homes.
These include a single-family, condo, co-op apartment, townhome, mansion, tiny home, mobile home, container home, castle, and the Villa. The usable space such as the store, basements that are unfinished and the garage also determine the property’s value.
Age and condition
The new property does not require massive renovation as compared to an old and existing property. It is important to note that the old property has a faded-out structure while the new property has a well-constructed structure.
On the flip side, people would rather buy a 13-year-old house that is well maintained than a newer one that needs major renovation. An extensive renovation is expensive.
Upgrades and updates
Upgrades such as renovation significantly increase the property’s value. Older properties have a higher rate and feature to undergo renovation as compared to newly built homes. Renovation in homes such as kitchens, bathrooms, garages, and basements would ideally affect the home’s resale value if the renovation is done “perfectly” and up to standard.
Furthermore, a renovated swimming pool would drive up the value of the property. This occurs if the swimming pool hosts events such as a house party.
Supply and demand
If the estate has posh property and the huge demand for purchase is on an upward trajectory, then the price of the property will increase.
On the contrary, if the estates housing the property are new in the market, to attract more investment in the property and drive up sales, the price of the property will go down. Imperatively, when supply exceeds demand, the prices will start going down.
Real estate information
The information on the property should not be exaggerated. Additionally, undervaluing the property to drive sales quickly is fraud. The property's worth, value, and the sale can be measured on the following yardsticks:
Types of homes, year built, square footage, number of bathrooms and bedrooms location (does it have proximity to important social amenities) and basement or the garage.
This information estimates approximately the value of a property.
Planning/Building Regulations
In the recent past in Kenya, we’ve seen properties and buildings collapse and cause irreparable damage. Such accidents and loss of lives can be avoided if building regulations are adhered to strictly in strict conformity to the building laws of the land.
Building property in haste without proper permission leads to property demolition hence financial waste taking place. Building regulations do not hamper investment property development but rather enhance safety measures that do potentially save lives.
Interest Rates
If banks offer higher rates on loans and mortgage acquisition, then lenders will follow suit. This essentially means that once-monthly mortgage payments are huge, and properties will be sold at a higher price hence being unaffordable.
On the contrary, lower interest rates mean the property in question will be more affordable and “financially accessible”.
Economic Factors
People’s ability to buy or sell a property is very much dependent on how the economy is “fairing”. In economies that are stable and the citizenry has “money in their pockets”, people are likely to invest in buying their first home or even a second residential property to call home.
Unfortunately, when the property demands skyrockets, the property price will also increase. On the other hand, if the unemployment levels surge and bite acutely, fewer people will have the purchasing power to own homes.
Subsequently, the prices of the property will drop and become “affordable”. The economic factors should be well understood before a decision to purchase the property is made.
The elephant in the room is whether the property’s worth matches my financial need and meets my home “desire”.
A professional real estate agent will assess the property’s valuation and help you make the best decision on whether to buy now or purchase later. In consideration of all these factors, the choice is your potential investor.
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