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Have you ever wondered how valuable your property is? Yes, every property has some value, but what makes buying a property at a particular location better than purchasing the same property area at a different place? Some factors affect property value more than the others.
For example, buying an area in the city will be costlier than purchasing the same space in the state’s rural or outskirts.
But, you don’t need to worry because estimating the property valuation is easy to learn, and you can do it right here.
Firstly, What is Property Valuation?
As the terms suggest, it refers to the property value. The property investors add up the property value based on the various factors that affect its cost.
Once all these characteristics get analyzed, the total addition of these values gives the sum. And this final value of the property is its current purchasing and selling price.
Usually, investors that can give the real value of the property have the certification and data that help them understand every affecting factor, including the market trends, and calculate accordingly.
In short, property valuation is the calculation of the value of the property.
While calculating the property value may not be in your hands, but there are some things that you may need to consider before getting the valuation of your property done.
What to Know Before Doing Property Valuation?
Mortgage Payment
If your mortgage payment includes taxes and insurance, it will likely increase your property’s value, and the exclusion of taxes and insurance in the mortgage payment will decrease the amount.
A mortgage payment will logically mean a higher property valuation, and low debt results in a lower property valuation.
Down Payment Cost
A down payment is the difference value between the property cost and the loan amount. The down payment cost depends on the type of mortgage loan taken.
Another factor that can influence the down payment cost is the investment strategy getting used.
Most down payments get considered as the booking amount that one pays at the time of purchasing. And then, the owner has to pay the pre-determined monthly installments.
Rental Income
When calculating the property value, rental income is essential to get a mortgage loan.
Incorporating rental income that is over the mortgage payment helps negotiate better loan conditions. And vice versa, a low rental income when compared to the mortgage payment can restrict loan terms.
It makes rental income an essential factor in the calculation by the best valuation company in Melbourne.
Price to Earnings Ratio
The price to earnings ratio is the ratio between the household price and the household income in that particular location.
A low rate results in a lower cost of the home, which means it becomes more affordable, and a high degree will lead to a costlier home.
On the other hand, apart from the price to earnings ratio, it is essential to consider the cost to rent price ratio.
While these are the factors you will have to incorporate before checking up your property valuation, several other factors directly affect the property value.
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What are the factors that affect property valuation?
Property Size
When purchasing the property, you have to determine how big or small is the property you wish to buy.
Unlike products, properties get sold in the general unit of square feet. Factors like purpose, people occupying, and others, the square footage of the area may vary.
The higher the number of square feet, the higher the property price and vice versa.
Location
As we have already established, the choice of the property location will affect its property valuation. The property value will increase if the area is well connected and on the city side.
And on the other hand, a property bought on the state outskirts and with little transport facilities will have a lower property value.
Moreover, an empty neighborhood risks resident’s security, which will result in a lower property value.
Condition
For example, when buying a defective product, you would expect a reduced buying cost, right? The same property that is damaged will have a lower value.
A house that is old and barely maintained is not going to appeal to the buyer. And it will not make them want to pay a high amount.
Whereas a highly supported and visually appealing property will attract more buyers who will be willing to pay a higher price.
Age
A new property will not require much attention, as it is newly built and will have lower maintenance. While on the other hand, an old estate will not have the same value as the new one at the same location.
Old properties will require higher maintenance and hence has a lower property valuation.
Other factors like market trends, renovations, floor plans also affect the property value. Moreover, as time progresses, the property value may increase or decrease depending on the property developments.
