How to Set the Right Selling Price of Your Property
For people who wish to offer their residential property on the market, ascertaining the correct price of real estate assets could be intimidating at first. There are different ways to determine the value of a property and with sufficient research, you will realize that it is not actually rocket science. In order to benefit from your investment, you must be able to pin point which approach will provide you with a better appraisal and will give you the highest monetary benefit.
There are two common approaches for determining the value of a property: The Cost Approach and the Sales Comparison Approach. Most brokers and sellers would base the value of the property using the comparison approach since it is the most convenient way of assessing the worth of a residential space. However, it might be difficult to look for a comparable property within the vicinity where the subject property is located in terms of size and layout of the unit or the structure. Moreover, the last sale of the property within the area might have been a long time ago. Naturally, the appraisal of your asset could have changed drastically and you cannot just compare the selling price of a property sold five years ago with the residential space you wish to sell at present. In such instances, the Cost Approach would be more beneficial. Sellers would usually ask real estate brokers or appraisers to evaluate the cost of their property but you could actually learn this method easily so you can assure yourself if you are offering your home for the right price.
The Cost Approach where the price of the property can be projected by adding the value of the land and the reduced value of the improvements on it. The worth of the land depends on different locations and would be founded on the prevailing market value of the area. Most of the time, sellers would ask for a bank appraisal first just to get an idea of the actual price and compare it to the actual market value dictated by the real estate industry. The bank appraisal is generally at a lower rate and sellers would rely on the market value instead.
Residential properties will be valued differently but the value increases or depreciates in terms of location as well. New condominium units in Makati and Bonifacio Global City are selling at the average of Php 130,000 per square meters and this rate has been continuously increasing. The difference will depend on the type of condominiums and how modern the amenities and facilities are. The cost approach is not usually applied to condominium units since this method requires a comprehensive understanding of the costs of construction and its materials. More so, the prices of the units are already fixed by the developers of the condominiums.
The cost approach method is more applicable for houses and lots for sale. With the cost approach, appraisers or sellers must separate the cost of the land from the improvement built on it.
The second type of pricing a residential property is the Sales Comparison Approach which is the commonly used by agents and sellers since it is the most convenient way of ascertaining the usual price of a property when compared to other surrounding houses or commercial spaces. Most brokers and sellers will rely on the value of the last sold property within the area which is more or less close to the estimation of property appraisers. It is important to take note however that the subject property must be compared to others which are most likely similar in terms of date of construction or used materials. Other factors which can affect the comparison are the date of sale (that is why the most recent sale should be the basis), location, style, extra improvements such as a porch or garden, the floor and lot area, etc.
The selling prices happening in the same area are available from the networks of real estate brokers. This is the one of the reasons why hiring a real estate broker could actually benefit a seller more than not asking for help. Real estate agents are aware and knowledgeable of the correct price of which the property must be sold in a particular locality.
The Sales Comparison Approach is actually useful when determining the right price for residential properties.
Recently, news about a 1-Billion worth of house located inside Forbes Park listed on Hoppler’s website was released which for some property experts think is quite unrealistic. You will realize why property specialists opined that the price is too far-fetched if you familiarize yourself with the Sales Comparison Approach. The ongoing rate in the market for houses in Forbes Park is Php 200,000 to Php 225,000 per square meters while the controversial home is being offered at Php 500,000 per square meters.
Other factors that would make a house and lot more valuable aside from its size are additional features which other homes in the same village or community might not have. Examples are built facilities such as a swimming pool, the size of the garage, if there are additional floors, the structure, the proximity of the street to the highway, if the house has historical value, etc. A newly renovated or fully furnished home will understandably cost more.
When dealing with residential condominiums, many factors are considered as well. First, you must ascertain the type of condominium building where the unit is situated. Mid-range and luxurious condominium buildings would vary in the amount of association dues because they provide for different amenities. The higher the amount of the dues per square meters just like in high-end condos, the more expensive the properties are. Knowing the correct selling price of a condominium space is relatively convenient since the selling prices of newly sold units are readily available at the admin office of the residential towers. You can compare the selling price of your property with another unit located in the same floor which has the same lay-out and size. However, you must keep in mind that the selling price of a condo unit would be higher as the floor increases. The reason for this is that units which are located on upper floors will certainly provide a better view of the city compare to those which are situated in lower levels. For luxurious residential condos, a higher level might cost a buyer almost Php 1 million more while mid-range units will increase by Php 500,000 if located on a higher floor.
Another aspect that a seller must consider is the orientation of the unit. Two condominium units may have the same size, lay out, floor level but one is facing a pleasant view of the city skyline while the other is located in front of a depressed community. Obviously, the unit which has a more attractive view will be assessed with a higher selling cost. Some units might be facing a construction site of another tower which will make the price of the property low at the time of the transaction. Although, after the high-rise has been finished, this can increase the cost of your unit most especially if it turned out to be a better view since it is facing the garden of the other tower for example.
Other homebuyers who subscribe to Feng Shui will also consider the unit number of a property before buying such. Most of them avoid the number 4 or 13 since 1+3 add up to the number 4 which symbolizes death in Chinese. If you wish to make your property more valuable to a Chinese homebuyer, make sure that the home is not near or facing a cemetery and the unit or floor number does not involve the numbers 4 and 13.
In selling your property consider your priorities in terms of profiting from your investments. For example, some owners would immediately offer the residential properties at a price lower than the fair market value since they are in dire need of money. This is also coined as the rush sale. However, if you are not in a hurry, you can wait for the most favorable time to offer your real estate assets in the market in order to attain the best potential revenue.
In setting the right price of your residential property, knowledge on various factors that affect the pricing is an advantage. However, you must transform the information that you already have to acquire a better discretion in dealing with your investments.
