How to calculate the market value of a property

For a quick and profitable sale of real estate is extremely important to correctly determine its real value. When the object is overpriced, it is difficult for the seller to find a buyer. When the value is undervalued, the owner receives less benefit from the sale of the property. Let's look at what the market value of real estate is, how it differs from appraised value, and how to determine it.

What is the market value of real estate

The market value of real estate is the price that is set in such a way that it satisfies both parties to the transaction: the seller and the buyer. The value is formed by the market: to evaluate the object, the prices of similar apartments or houses in terms of size and location are taken into account. At the same time, the price may be influenced by the features of a particular apartment: condition, repairs, availability of furniture and appliances, etc.

What is the difference between market value and appraised value?

Market value and appraised value are different concepts, so you should not confuse them.  If the market value of an apartment or other object can be determined independently or with the help of a realtor, the appraised value is set by an appraiser. An expert appraisal may not coincide with the real estate agent's appraisal.

An expert appraisal of the property is mandatory before the sale of the property, as it can affect the amount of taxes and fees. If the appraised value is lower than the real value of the property, the notary calculates taxes on the higher amount. In this case, the actual market price of the real estate is indicated in the contract of sale and the tax is already paid on it.

It can also happen that the appraised value is higher than the market value. In this case, you will also have to pay taxes on the higher amount, although in fact the seller will indicate in the contract the real amount of the transaction and that is how much money he will receive.

What affects the market value of real estate

Many factors affect the market value of the object. Among them are the location of the property, the prestige of the area, the technology of construction of the house (panel, brick, monolithic-frame), the year of construction, the condition of the apartment, the area of housing, etc.

What most of all affects the formation of the real value of the object:

• characteristics - type of layout, kitchen size, combined or separate bathroom, ceiling height, type of walls, the presence of a balcony (open or glazed), etc..;

• condition and age - how long ago the house was built, when the apartment was renovated, the condition of the entrance;

• infrastructure - whether there is a subway or public transport stop nearby, whether there is a parking lot or open parking, whether there are stores, schools, kindergartens, shopping and entertainment centers, medical institutions and other infrastructure facilities, as well as whether there are no factories and other industrial facilities, landfills, cemeteries, etc. nearby;

• urgency of sale - if you need money urgently and it is important to sell the apartment as soon as possible, you will have to seriously reduce the price.

The price of an apartment is also influenced by the presence of similar properties nearby. If there are competitors, then the price will likely have to be lowered a bit in order to make your offer stand out and attract potential buyers.

Depending on what objects need to be valued, different factors can be taken into account to determine the value. For example, if you need to sell a plot of land for building a house, the remoteness from the highway, nature, shape of the plot, availability of communications, etc. will play an important role here. In the case of selling commercial real estate, the formation of market value is significantly affected by the potential profitability of the object: in what neighborhood it is located, whether there is a good traffic of people, whether there are stores, cafes and other establishments nearby, etc.

How to determine the market value of a real estate object on your own

You can determine the market value of your property yourself, that is, without hiring a real estate specialist. You can do this in several ways.

To determine the cost of an apartment, you can use special online calculators available on some specialized websites with advertisements. Such a calculator will calculate the average market value, focusing on information from similar ads. But it is wrong to focus only on this calculation, because it still can not take into account the individual characteristics of the object, for example, recently made repairs or changed layout.

The cost generated by the online calculator can be taken as a starting point, but it is important to supplement it with other research. You should be sure to study the current offers on the market, which are similar in their parameters to the object for sale.

You can find similar properties on specialized websites, in thematic groups in social networks, on advertising platforms. It is worth studying at least ten options, so that the assessment is as objective as possible. If the apartments differ in area, it is most convenient to calculate the cost per square meter, and then compare the results.

It is quite difficult to correctly determine the real value of real estate on your own. The seller always unconsciously wants to inflate it, as it is his property, in which he invested his money. At the same time, an inflated price will result in less interest from potential buyers. When the seller starts to reduce the price stated in the ad, this can also have a negative impact on the attractiveness of the object. If an ad hangs on the site for a long time and the apartment is not for sale, and the price periodically decreases, many buyers will think that there is something wrong with this object. That is why it is so important to determine the market value right away.

Why you should turn to professionals for real estate valuation

In order to sell an apartment or other object, it is mandatory to contact an appraiser to get a property valuation report. The document is necessary for the notary to determine the amount of taxes during the transaction. It is not necessary to contact a realtor to determine the market value, and many people neglect this possibility. Although it is convenient and beneficial for the seller.

Here are some of the main reasons why you should contact professional agents for real estate appraisal:

• the realtor is well aware of the real estate market, the current situation and the characteristics that will help increase the value of the property;

• the agent will suggest what can be changed or improved without much effort to sell the apartment more expensive;

• a specialist will determine the real value of the object, which will help to sell it in the shortest possible time, at the same time with a profit for the seller;

• the realtor knows how to evaluate the property even in the case when it is a non-standard object and there are no similar offers on the market.

Equally important is the fact that by applying to an agency for an appraisal, the seller saves time and effort. He does not have to study the market himself, look through dozens of advertisements, compare other people's apartments with his own in order to understand what price to put on his apartment. The realtor will evaluate the apartment quickly and correctly.

Contact Mayak Real Estate Agency to sell your property at a favorable market value.