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Estimating the price of a property plays a key role in many situations. However, it is good to know when an appraisal is legally required and who can (or must) prepare it at any given time.
Reasons for a property valuation
A property valuation may be necessary for a variety of reasons. In the case of inheritance proceedings, a property valuation is essential for a fair distribution of assets among the heirs. Likewise, when selling or buying a property, an appraisal is crucial to establishing a realistic market price. Another reason may be the need to establish the value of the property for mortgage security purposes. However, it is not always necessary to go straight to a forensic expert.
Who will value my property and when should I contact a surveyor?
Property valuers, who are trained in market analysis and property valuation, play a key role in the valuation process. In some cases, such as probate proceedings or litigation, an expert witness is needed to provide an official estimate of the property’s value.
Forensic appraisers have the most expertise of all appraisers and in certain situations are irreplaceable by anyone else. Especially because they are the only ones who can give what is called an expert report. This is necessary as evidence for the purpose of litigation (including the disputed settlement of joint property after divorce). Court experts are specialists registered on the list of experts maintained by the Ministry of Justice and authorized to perform expert activities. Their services are likely to cost you the most. Although you can also contact them for private purposes (for example, selling a flat), unless you have really compelling reasons for doing so, it is rather not worth hiring one.
Use the services of a bank valuer when buying a property. The bank uses its specialists who are familiar with the property market and can take into account the location, age and current condition of the property to determine its price. Based on their assessment, you will get the basis for your mortgage loan.
a real estate agent is a specialist employed by a specific real estate agency to broker the sale of your property. Their interest is to set the price relatively high, as this is what their commission is based on. But at the same time, you usually do not have to worry about being “overcharged” because even the realtor itself has no interest in the sale of the property stagnating because of the high price. You can also use the services of a real estate agent or a sole trader appraiser to estimate the price of a property for probate proceedings.
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Tip: Each property has its own specifics that must be taken into account when selling it. An older house will need different details than a new house. How exactly to proceed when selling an older house and what to remember in the contract? This is the subject of a separate article.
What are the methods for valuation?
Different methods are used to value a property. The market valuation of a property is the most common and involves a comparison with similar properties on the market. Other methods include the cost approach, where the valuation is based on the cost of building the property, or the cost of building another similar property over a period of time. It is typically used to determine the price of new properties. The income approach, on the other hand, focuses on the potential income from the property. It therefore takes into account the relationship between the market price and the potential benefit to the owner. Such a consideration should be made for the purchase of rental properties.
These methods can be combined in various ways. However, it may be that for certain purposes, for example, a court or a bank may order that a particular method or combination of methods be chosen.
What affects the price of a property?
The price of a property is influenced by a number of factors, in general the level and movement of property prices at any given time, in other wordsthe market situation, together with interest rates and the economic situation. Market fluctuations, such as changes in supply and demand, can significantly affect the price of property. Economic factors such as inflation or economic growth also have a significant impact on this area.
Of the factors relating to a particular house or apartment, the size, age, condition, layout of the apartment and the location are also very important. Property prices vary not only between towns and villages but also between different parts of towns. Location close to the centre, good transport accessibility and infrastructure significantly increase the value of the property.
However, the mentioned size or, if we want, the area of the apartment or house hides some tricky things. It is not enough to determine the price per square metre in a given location and then multiply it by the number of metres of a particular apartment. It is true that the price per square metre is higher for smaller flats and then decreases as the size of the property increases.
The layout of the property then plays a role in whether all the windows are oriented in one direction or whether the apartment or house offers more options in this respect. It is important how spacious the rooms are and whether they are pass-through or, for example, whether the kitchen is (not) connected to the living room or the bathroom to the toilet.
Also important are the materials used, the surroundings of the property, for example the floor on which the flats are located, etc.
Recently, the energy performance of properties has also become increasingly important. Energy-efficient houses and apartments can have a higher value due to lower energy costs and a positive impact on the environment.
Getting the price of a property right is key to selling it. Too high a price can deter potential buyers, while too low a price can lead to financial losses for the seller. A professional appraisal helps to strike a balance between these extremes.
How much will a property valuation cost me?
The cost of a property valuation varies depending on the complexity of the valuation and the expertise of the valuer. A standard appraisal may be relatively affordable, while a complex appraisal for court purposes or probate proceedings may be more costly.
Can I value the property myself?
There are undoubtedly situations where, on the one hand, you need to know the value of the property, but at the same time no regulation requires you to obtain a professional appraisal. This typically happens when selling your own property. On the one hand, estimating the price of a property is a complex process that requires expert knowledge and understanding of the market. But if you want to go into it as a layman, it’s not impossible. However, it does require patient market research and finding as many similar properties as possible (in terms of size, property type, location, etc.) that are currently on offer. From their price, I can then deduce at least a framework at which price I can try to offer my property.
Various apps, and digital tools are becoming increasingly valuable in the property valuation process. There are calculators, price maps and websites on the web to help you with property valuation.
Tip: Selling an apartment or house is not easy. At least that’s what we hear from real estate brokers who cannot recommend self-sale for perfectly logical reasons. But is it really so hard that you can’t handle it on your own and without a realtor? Whether your motivation for starting to sell without the help of a real estate agent is the desire to avoid paying commission, or you simply don’t trust brokers, we’ll tell you how to proceed, what to look out for and when it’s better to seek the help of a professional.