How to determine the value of my home

While estimating the price of a home, most of the sellers forget that the value of the property is not merely based on what they initially paid for the house or the amount they have spent on its remodeling. Market value of a property is what a ready and willing buyer would pay.

What is market value of a home?

Market value is the price at which a house would sell under normal conditions. This excludes sales happening due to unforeseen circumstances such as relocation, death of a family member or any other emergency where the seller is forced to sell the property. The market value of a home is based on the following factors:

External elements

These include condition of the property, its curb appeal (attractiveness when viewed from outside), water facility/sewage system, architectural style and pavement.

Internal elements 

Construction quality, size of the property and number of rooms, whether furnished or not, condition of home appliances, etc. are some of the internal elements that have a direct bearing on the market value of the property.

Location

Location is always a prime factor in deciding the market value of a property. Factors such as how developed, safe and peaceful the neighbourhood is, major landmark(s), proximity to civic amenities, transportation network and scenic views are critical factors for residential property valuation.

Market dynamics (supply and demand)

Property prices rise and fall on the basis of demand and supply in a particular region. It is calculated by taking into account the number of homes available for sale in your area versus the number of buyers in that area plus how quickly a property sells in your area.

Kareem Khan, Managing Partner of Network Ventures avers, “Apart from location and demand, market value of a property largely depends upon the cost at which similar properties in the neighbourhood were sold lately.”

How to assess the estimated market value of your property?

While assessing the market value of a property, always keep in mind that you are evaluating the market value of one particular house. “Parameters for computing the market value of an apartment in a gated communityor a villa are different from that of commercial property,” adds Khan. Location of the property or its neighbourhood should be the starting point for your investigation. For instance, price of a 1000 sq ft apartment in South Delhi’s Vasant Kunj area would be comparatively higher than price of a house with similar characteristics in Munirka.

• Look out for comparable properties in your neighborhood or nearby locations which were sold in the last three months. ‘Comparable’ here refers to properties that are similar in size, style, age and location. If you have hired a broker, he will assist you in this search. In case you have not hired anyone, you will have to research online and analyse current listings in your area or society. Talking to local dealers or neighbours can give you an idea about the price range of a similar property in your area.
• Now, select three comparable properties which are identical in each and every aspect of your home such as age, size, amenities and style. If you are able to find comparable properties, well and good. If not, you will have to make adjustments in the sale price. For instance, a property similar to yours having extra amenities would be priced higher. Similarly, a property with no car parking/garage would be priced lower. Accordingly, you will have to make adjustments in sale price of all three comparable properties.
• Once you are done comparing properties, adjust the final sale price by adding or subtracting to each amount. If your property is comparatively newer, larger in size and has additional features, you add up the cost to the final sale price. This is perhaps, the most complicated step as it requires a lot of calculations depending upon several aspects of the property. However, a thorough assessment is beneficial in finding the right price of your property.
• Add the adjusted and final sale price of all three comparable properties and find their sum. Divide the sum by three to get an average adjusted final sale price. This amount is the estimated market value of your house.

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. 99acres does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.

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