Property Valuation in  Real Estate

Are you looking for a new property, or buying a property for the first time? It's vital to get the most out of it. Picture this, you find your dream home, a car or that perfect piece of land to call your own. You can't gauge its worth. What do you do? Definitely search it up. By looking at a property's worth, you are doing a valuation. Property valuation is usually conducted to familiarize with a variety of ideologies relating to financing, taxation, insurance and property investment. 

Property valuation is simply defined as the process of calculating and determining the estimated market value of a real estate property taking into consideration its location, size, age, market trends and general conditions. Property valuation can be conducted by professional valuers or property appraisers through various approaches such as cost approach, sales comparison approach and income approach. All these approaches vary from each other.

The cost method approach involves estimating the total cost of building a property to determine the value of constructing or rebuilding the property. For sales comparison, the approach involves analysing and comparing the main subject property with recently sold real estate properties dwelling in the same proximity. The income approach on the other hand uses an estimate of the property value based on expected future lucrativeness or profitableness.

According to  Kucharska, E (2013) Real Estate  Management and  Valuation, the resulting valuation results provide an estimated value of the property based on the current market conditions and relevant factors. Hence property valuation is vital because it helps in knowing the exact value and worth of a specific property assisting both willing buyer and seller to determine if the property is appropriate and if its worth aligns with the current market price.

When one seeks a mortgage loan he/she must provide a valuation of the property as a requirement needed by financial institutions to evaluate the total interest to be charged and also determine various mortgage terms and conditions. In addition, when renting a property, valuation is done to determine the fair rent of the same. The value tends to determine the area's current rental rate.  

In terms of insurance purposes when one wants wishes to save his/her property from damage the value of the property must be estimated by the insurance company which helps them determine the general coverage cost. Property disputes among family members, peers, individuals and government organisations are common not only in our courts but all over. To avoid such wrangles or in other terms to settle, property valuation is usually conducted to facilitate even distribution among the affected parties.   

Before we invest in real estate property it is of critical concern we understand all mentioned above as it may save you from fraudulent practices and exorbitant property prices subjecting you to buying a property at a higher rate than the actual market value.    

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