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Property Valuation is a crucial as well as a tricky aspect of any property transaction. Whether you wish to buy\sell property, get a home loan against property or even execute your will, correct valuation of property is extremely important.
How to assess the value of a property?
You can either opt for self-assessment or make use of an external source like professional agencies and government registered valuers. In fact some real estate agents also assess properties based on the prevailing market rates.
Property valuations made by district administration are often not in sync with the market dynamics and therefore, do not represent the actual trading price of the property. It is therefore advisable to hire the services of a professional surveyor who offers services in property valuation.
Certified property valuations also come in handy to expedite the bank loan approval process for loan against property as security.
Methods for Property Valuation
Though there is no formula or scientific technique for valuing a property, there are various methods to estimate the value of property.
- Comparable Property Method: You can estimate the value of your property on the basis of the average value rate per unit area at which similar property in your vicinity was actually sold. Multiply this by the actual area of your property and make upward or downward adjustments on account of some specific advantages or defects in the property under consideration.
- Discounted Value of Rentals: Under this method you discount the future cash flows i.e. future projected rent earning capacity of the property to the present at the current interest rate. This will give you an estimate of the monetary value of the property.
Factors Affecting the Market Value of a Property
The important parameters that you should keep in mind while coming to a decent value for the property are:
- The demand and supply conditions.
- The quality of the property viz. the material used, building design, age of the property and the credentials of its developers.
- The location of the property, the local infrastructure in the area, safety and security, basic amenities and connectivity by road, rail or air.
- Maintenance of the property and its premises.
- Layout of the premises in terms of space utilization etc.
Based on these guidelines you can estimate the value of property yourself.
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