Let me guess… you want to know: How to evaluate a property?
The process of evaluating a potential property for purchase can feel even more intimidating than the purchase of a personal residence.
When purchasing property for an investment, there is often large risk associated with correctly calculating the repairs needed, the price you can sell it for, and the acquisition price. You also often have other people’s money, time, and resources on the line because you employ people in your business, and homeowners who are relying on you to do a good job.
That’s why it’s so important to make sure that you are correctly estimating the true value of a property before purchasing a property for an investment. In order to help you with that, we will offer you five easy steps on how to evaluate a property.
1. Research the market
The value of a property depends on the state of the market at the time it is listed. . The prices fluctuate during the year, depending on how the housing market is doing. This is why researching the market is a must when evaluating a house. The property could look amazing and be new, but if the market is not doing well, the price will be set accordingly. That is why it is important to thoroughly research the active market before settling on a final price.
2. Research the area where the property is located
Another factor effecting the value is the area in which the property is located. For example, if you are looking at a commercial building, its value will be controlled by the other properties located around it.
The same goes for suburban houses. What is the neighborhood like? Are prices rising or falling? Is there new developing city infrastructure like parks, public transportation, schools, and hospitals? Developing businesses and strong school districts can both be a signs of a strong housing market.
3. Compare Properties
In order to properly evaluate a property it is extremely important to find others like it and compare the given values. Find a few located in similar areas, with a similar size and physical state. After doing that, estimate the value of each property and compare it to the one you have. This comparison will give you a glimpse into how other properties are standing on the market, and this could possibly lead to increasing the overall value of your house or building.
4. Consult an Expert
Contacting a talented real estate agent, or a company like Simplified Properties, to help handle your transaction is always a good idea, especially if you do not want to do the work of selling the home yourself. An agent who is an experienced professional, familiar with the business and market, can help give you an objective opinion. Agents can also help give advice based on how to improve the value to current buyer standards in the area. Either way, the assistance of an experienced agent can help you a lot.
5. Check out the condition of the property
Lastly, you should pay a visit to the property in question and have it checked out from top to bottom. Look for any changes in the structure, any possible cracks, repairs that need to be done, finishes that should be updated, and everything else needed to bring the property up to current market standards.
The state and condition of the property – whether it is new or old, – effects the value very much. For example, if the house is old and hasn’t been updated for a long time, it’s highly likely you will have to invest much more money into all the repairs, so you’ll need to purchase it for a lower than market price. You would actually be spending a lot more money than planned, because a lot of issues can appear as time goes by.