When valuing properties especially in cases of taxation or donation/succession, the market value of a property must be determined. Many methods for approaching the true price of a property exists, such as valuation by comparison or valuation by income.
Among the available methods, the valuation of real estate by market value is the most used . This article explains how this valuation works
The main parts of the articles:
1. Understanding what the market value of a property is
2. Knowing the elements in the calculation of the market value – Estimate the market value yourself or call an appraiser.
3. Estimate the market value yourself or call an appraiser.
1. THE PRINCIPLE OF THE MARKET VALUE OF A PROPERTY
In finance, the market value of an asset is the price that can be obtained from it in a financial transaction on the market. This clearly defined concept is nevertheless subject to current market conditions, and therefore to the law of supply and demand, particularly with regard to the sale of real estate.
There is no precise method for calculating the market value of a property, but several parameters must be taken into account when determining it in order to obtain an estimate that is as realistic as possible.
2. PARAMETERS USED IN CALCULATING MARKET VALUE
You may need to know the market value of a dwelling in several situations. For example, if you are considering buying a property as a rental investment, you will need to make sure that the seller is offering a fair price that does not exceed the market value of the property.
In order to be sure that you are approaching the correct market value of the property, it is advisable to consider several factors, such as:
- The geographical location of the property.
- The surface area of the property.
- The current condition of the property and the potential renovation the buyer will have to do
- The outstanding and future charges of the co-ownership in the case of an apartment.
As a buyer, you will take all these parameters into account when making a financial proposal to the seller. In the calculation of the market value of the property, it will not be necessary, however, to include any decoration or refurbishment work that you plan to carry out in the accommodation.
3. HOW DO YOU PROCEED TO OBTAIN THE MARKET VALUE OF YOUR PROPERTY?
Estimate the market value of a property yourself
In order to determine the market value of a property, you can contact real estate agents in the area or the statistics of local notaries to get an idea of the prices charged in the geographical area where the property is located. Then, all you have to do is compare the figures obtained with the selling price of the property.
Also take the time to browse through the advertisements for the sale of housing comparable to the property you are planning to buy (same area, same surface area, same number of rooms, same equipment, similar floor and sun exposure characteristics, etc.) in order to give you an idea of market prices. You will find ads on the Internet or in real estate agencies. To take the work into account, it is possible to ask for estimates from companies and craftsmen, with the aim of retaining coherent, written and unquestionable assumptions.
Have the market value of a property estimated by a professional
If you lack the time and knowledge to estimate the market value of a property yourself, you can approach a professional structure that will do this for you, such as a real estate appraisal firm.
Experts will study the characteristics of the dwelling and the market in order to define a market value for the property. At the end of its analysis, the firm will issue you with a certificate of the market value of the property. Please note that this document may be subject to reservations. It remains indicative and does not represent a firmly defined price for the property. But it is the most reliable estimate you will be able to obtain.
The request for a certificate of market value from an appraiser is a paying process and the rates vary according to the professionals. Before committing yourself to an organization, take the time to ask for estimates from several firms.