The value of your property can be seen in three primary pieces, each of which need to be considered when trying to understand the value as a whole.
Specific, Measurable Qualities:
The components of the specific valuation method for a property include characteristics such as age, size, room layouts, and storage space. These are measurable qualities that can be determined with exact numbers and notations, which are indisputable to another set of eyes.
Perhaps most important in this piece of the equation is the land on which the property is found. Land is considered an appreciable asset, likely gaining value over time, while the building itself is a depreciating asset. The value of the land will remain, so long as the area is stable. Location within a neighborhood is also something to consider. For example, being located on a cul-de-sac is often seen as a more desirable location than on a busy cross-street. Depending on the length of time the property will be held, this piece of the value is likely to be of the greatest concern.
Beyond the obvious characteristics of the age and size of a property, many unseen factors should be taken into account when determining the value. Unseen factors include items such as the plumbing system, electrical wiring, heating system, and possible decay. While a thorough inspection will make anyone aware of these issues, they are sometimes ignored or missed because they are not obvious factors seen with an untrained eye. The structural integrity of a property needs to be considered to get a full and fair valuation of a holding.
And while there are plenty of specific characteristics of a property that tie into the valuation, there is also a generic factor to consider. What can be seen as a desirable feature to some is considered a hindrance to others, such as an in-ground pool or a unique color scheme. Some of these general factors can include aspects such as the location and demand for other properties in the area. Supply and demand can dictate a large piece of the value for a property, so the number of other properties on the market can impact a value significantly in both the positive and negative directions.
While each property is different, and appraisals can vary significantly over the course of a year or by different agencies, each of these general factors must be considered in order to get a fair value established for a property.
Interested in learning more? Contact us to find out more about investing in properties and making sure you know the true value of your investment.