6 Considerations to Better Value Your Real Estate.

Valuing your real estate property is a key factor in successful real estate investment. It is important to consider all factors when determining the value of your property. This publication will explore what to consider to accurately value your real estate.

Firstly, it is crucial to look at the physical features of your property. This includes the size of your property, the number of bedrooms and bathrooms, and the age of the building. Broadly speaking, the more square footage a property has, typically the more value it has. But you do need to consider that as properties increase in size, the relative value decreases due to the effect of economies of scale. Simply put, while the dollar amount typically increases as square footage increases, the price increase per square foot diminishes as the property size increases.

Secondly, location is a major factor in determining the value of any real estate property. Key factors that can affect a property’s location value include the proximity to popular attractions including restaurants, shopping, and entertainment venues, public transportation, and good schools. The value of a property located in a popular, in-demand area of town is typically higher than a property in an unpopular or undesirable area.

Thirdly, it is important to consider the current market conditions and trends. Market trends like supply and demand can shift the value of a property positively or negatively. For example, a property in a city with a rising economy may experience an uptick in value while a property in a city with a stagnant economy may decrease in value. Real estate agents can be helpful in understanding local market trends and assessing the value of your property.

Fourthly, the age and condition of a property is important to consider when valuing real estate. Your property’s condition can affect the asking price in various ways, ranging from minor upgrades like a fresh coat of paint to larger construction or restoration work. A home inspector can also help identify any needed repairs or structural issues that could affect the property value.

Fifthly, the land the property sits upon can significantly impact its value. The land alone can hold value depending on location, for example, a property located on a waterfront or with a scenic view. Additionally, the availability of land in a given area can affect price with limited land supply translating to a higher value. And on this topic, how the land may be used as designated by local zoning and other ordinances will affect its value.

Sixthly, it is important to consider the income that can be generated from a property when making value assessments. For example, if the property has rental units, you can assess the value based on the income the property brings in. Usually, the higher the income, the higher the price, but income value is also affected by other factors, such as interest rates, where what used to be a high income property is now only a medium income property due to the higher costs of interest rates.

Finally, it is important to also consider unique features of your property like a pool or a garage, which can add value (or detract value). An example of this is an outdoor pool in the Chicago market verses in the Florida market. It can be argued that a pool is more valuable in areas of hotter weather verses in climates that prevent use, but still command the costs of maintenance. Often, these are features that cannot be upgraded and are therefore considered in the property’s total value.

In conclusion, valuing your real estate property is essential to understand prior to making investments or transactions. By taking into account each factor including physical features, location, market conditions, property condition, land value, income potential, and unique attributes, one can accurately determine the value of any real estate property.

To see how Team Sobiko’s Realtors® may assist you, please visit our underwriting, commercial or residential service pages.

This publication was created with the help of artificial intelligence software, which was then reviewed and edited for accuracy by a Team Sobiko staff member.