The final price of a property is determined by the sum of several internal and external elements. It is very important to put the focus of attention on those that can be improved to obtain the maximum possible benefit if the intention is to sell the property. Pawel Kentaro Grendys, an expert in Latin American real estate, explains how to increase a property’s value in order to increase the price.
It’s possible to classify the value of a floor into two types of conditions, immovable elements and changing elements. Both influence, in the same way, the final value of a property. The main difference is that some can be modified and others cannot.
The immovable elements would be those that are already fixed and determined by the type of property, and that, no matter how much you want, can not be modified. Instead, the changing elements are those in the hands of the owner. He decides if he wants to improve them in order to obtain greater profitability with the sale.
Explains Grendys, “Orientation, height and views are three variables that considerably influence the price. An attic will be much more valued than a first floor, as well as a floor with unobstructed views or a house that has a southeast orientation.”
The type of property matters, as well. For example, if it is an apartment, a duplex or a single-family house, and if it is new construction, renovated or old.
Another determining factor is the square footage that the house has. The smaller, the less you can ask for it. Although this factor depends a lot on the location of the property. A small apartment in a historic area of a large city can cost much more than a villa located in another municipality.
If the real estate is located in a good neighborhood, in a well-connected area, central or near the beach, with shops, supermarkets and schools, these will also play a role. In addition, having a storage room and covered parking is a plus.
An old house will not have the same value as a renovated one. That is why many owners decide to invest in a reform, to be able to sell the house at a higher price.
When buying, it is important to take into account all these factors. Since if, in the future, you want to sell the house, these components will be the ones that will determine the final sale price, along with the state of the real estate market at the moment.
This all leads to the real estate appraisal. To carry it out, you must take into account different factors, and it depends on them the decision that the professional will make, in addition to always keeping in mind the objective for which the appraisal was requested and the type of property to which it will be made.
Each of the valuation methods that can be occupied has a series of steps that must be followed in order to obtain the value of the property as accurate as possible. For this, we have software that will help us throughout the process to obtain the final result more quickly and efficiently.
Market value by comparison is a technique most used by real estate agencies. With it, the value of the property is obtained by comparing the property with previous sales of real estate with similar characteristics.
The appraiser is in charge of finding the properties that most resemble the valued property, both in extension and location, to analyze, classify and interpret this data set. You have the estimate of the cost to add or subtract characteristics that the furniture unit has or does not have.
The replacement cost method, also known as replacement value, calculates the value of the current property plus any improvements that will be added to it, with the aim of valuing it at a higher cost.
Capitalization by income is generally used to value large complexes such as apartments, offices or shopping centers. It is based on the relationship between the percentage of return that a buyer or investor requires or expects and the income that it produces.
Residual value is the value of a good at the end of its useful life. “Residual value is the amount that could be obtained for its sale, once due to its age or its conditions of use it can no longer be used for the activity for which it was acquired,” adds Grendys.
The dynamic method is indicated to assess urban or developable land, whether or not built, buildings in the project, construction or rehabilitation, even in the event that the works are paralyzed. On the other hand, the static method may only be applied to plots and buildings in rehabilitation where construction or rehabilitation can begin within a period not exceeding one year, as well as to build plots.