One of the most commonly used values is market value. It is determined during a professional valuation. However, there are cases when the value is set on real estate that cannot be evaluated at all. That is why we want to explain what the value is, what property it is set on and how to know the true market value of a property.
What is the market value of a property?
The market value of the property is the value of any object of movable or immovable property, which corresponds to the market and the situation that has occurred there. That is, this value takes into account all market conditions: demand, supply, falling and rising prices, shortages, etc. All these conditions are taken into account on the date of valuation.
Valuation of the market value of a property is the process of establishing the market value of a parcel of any type (movable, immovable, intellectual property, securities, assets), which meets all the requirements of valuation activities, and also takes into account all the above market conditions. Next, we will take a closer look at how to determine fair market value of a personal property.
How to find out the market value of the property: when is it needed?
when making managerial decisions;
in the implementation of transactions of sale and purchase of property;
when alienating property for state needs;
when determining the value of the placed shares of the company, which the company acquired on the basis of the decision of the General Meeting of Shareholders or on the basis of the decision of the Board of Directors (Supervisory Board) of the Company;
when establishing the value of the pledged object, including mortgage;
when establishing the value of non-monetary contributions to the authorized (share) capital;
in determining the property cost of the debtor-bankrupt;
If you understand “I want to sell my business online”, Website Closers advise you not only to establish the real value of the apartment but also to have its documentary evidence.
Which of these is a document that gives an estimate of a property's fair market value?
Procedures for property valuation are established by regulatory legal acts on property valuation. A property valuation report is drawn up in cases of independent property valuation. A property valuation act is drawn up in cases of independent property valuation by a state authority or local self-government body. The property valuation report is a document containing conclusions about the value of the property and confirming the completed procedures for the valuation of property by the subject of valuation activity – a business entity in accordance with the contract. The report is signed by the appraisers who directly conducted the valuation of the property and is signed by the head of the appraiser.
How to find the market value of a property?
There are three methods for how determining the market value of a property:
Comparative. In this case, the apartment is compared with similar ones. This approach makes sense if there is a large sample of reliable data on apartments with similar parameters and in similar locations. Usually, such information is available in real estate agencies, for an approximate estimate you can use open Internet sites.
Profitable. In this case, the potential profitability is estimated – from resale and/or rental (depending on the goals of the buyer-investor), as well as related costs.
Expenditure. In this case, it is assumed that the buyer will not pay more for the lot than it would cost to build or restore a similar property. The cost of the object is calculated as the cost of the land plot plus the cost of replacing or recreating the property minus the cost of accumulated depreciation. – mentioned by Jasen Edwards, chair of the Agent Editor Board at Agent Advice.
What affects the value of real estate?
First of all, the cost of the object is influenced by such parameters as location, the prestige of the area, the type and age of the house, the condition of the housing, and, of course, the area. There are a few key elements that impact the price:
property characteristics – layout, kitchen size, ceiling height, wall type, balcony, etc;
condition and age of the object – the quality of the repair and how long ago it was carried out, the condition of the entrance;
infrastructure – transport accessibility, availability of parking spaces, and social facilities nearby – shops, parks, medical and educational institutions. Unsuccessful neighborhoods with plants, factories, or landfills can reduce the cost of housing by up to 15%;
nearby real estate objects will create competition to your offer;
urgency of sale. If you need to sell the apartment in the shortest possible time, you will have to compromise and reduce the price.
