Author: Ewan O’Reilly
How to determine the value of your property?
The most efficient way to obtain a valuation on your property is through the instruction of an Estate agent. Estate agents use their market knowledge and experience together with tools such as Comparative Market Analysis, also known as CMA, to assist them in their determination of the value of your property.
CMA is accurate and considers factors such as the selling price of other properties in your area that are similar to your property in size as well as the last selling price obtained for the relevant property. Property valuation websites can also be utilized and can be found easily online.
Valuations in context:
Property price: this is the amount that a potential buyer is willing to pay for the property.
Municipal valuation: this valuation is used by Council to determine the amount of tax to be paid on that property.
This type of valuation assists the bank with determining the amount that they are prepared to lend to the purchaser.
Factors that play a role:
It is also important to keep in mind that there will always be other factors which will determine the value or perceived value or of your property.
The current interest rate and economic climate:
The economy will have an undeniable effect on the property market as lower interest rates encourage more buyers to either buy their first property or current owners to sell their property and purchase another.
The basic laws of supply and demand:
Should the supply exceed the demand, the Seller may need to price the property more competitively. (Buyers’ market) . Should the demand exceed the supply of property, a seller will be in a position to increase the selling price since buyers have less properties to choose from and will potentially spend more to acquire a certain property. (Sellers’ market)
The location of the property:
Properties with a view of an iconic landmark, ocean, valley, wine farm region, or mountain range will increase the value of the property. However, properties without a view of the above but which are near to any of the above can also play a role in the perceived value of the property. Furthermore, properties which are in areas which generate a large amount of traffic but have easy access to highways or national roads may further increase the perceived value.
The security features of the property:
These features can contribute to the value or perceived value since security products, such as burglar bars, security gates, beams and electrical fencing can be found in most properties in South Africa and can be costly to install should the property only have some or none of these features.
The general condition of the home:
Prospective purchasers who have identified repair work that will incur major costs will submit lower offers in order to compensate for the future costs of bringing the property back to optimal condition. On the other hand, the Seller should also endeavour to understand the market and what property prices in the area are before major improvements are made to the property with the idea of raising the selling price.