Article Written by Carl Dy
Are you selling your property and wondering how to price it? Are you buying a property and asking if it’s overpriced? How would you know if you are selling at a good price? How can you assess if you are buying a fairly priced property or not? Here are 4 ways.
4 Methods to Value Your Property
1. Comparative Market Analysis Method
This simply means sales comparison, using the Internet, research, other brokers come up with a list of comparative properties. You can make a list of 4-8 properties as a comparison and rank them in order of price to determine where the property you want to buy or sell rank.
2. Zonal Value Method
This is researching the zonal value of the property and using the zonal value establish the base price or starting price of the property. A property priced closest to the zonal value usually will signify its low priced.
3. Replacement Approach
This method is best used for buying property with improvement, meaning a house, a building, a warehouse, or any structure. You will separate the value of the land vs the structure to see how much premium or discount you are buying the structure. If the structure cost is almost same as a new one, you will now think twice if you will buy an old structure instead of buying land and just putting up a new structure.
4. Income Approach
This is the most common approach of businessmen where you use the rental returns as a measure to price a property. An average return nowadays is at 5% per year. If a property gives around 2-3% per year, you can also consider it with consideration to capital value over time, or the rarity to find that property.
There is no one best method to appraise a property, but using these 4 methods combined should give you a guide if your property is priced fair, below market, or at a premium.
To reach out to Carl Dy for private consulting or speaking invitations, you can message him at facebook.com/SpectrumCarlDy
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