Buying real estate property comes with fighting through the negotiation process in order to get the best investment deal. And as a buyer, you might wonder what causes the difference in price between these properties.
It is such a big financial investment, which means you need the right knowledge to negotiate effectively. In this blog post, we highlighted 5 major factors that determine property value, and their various elements.
Property Location
A major determining factor for every real estate property is the property location. Properties in urban areas will definitely not have the same market value as those in undeveloped or rural areas. Key elements of property location include;
- Availability of essential amenities like health care facilities, malls, schools, transport stations, etc.
- Infrastructural development; areas with essential industrial facilities, business buildings, connecting highways, etc have great market value.
- Natural environment; including greenery, eco-friendly features, security, well maintained road, solar energy, clean drainage system, community park, etc.
- Landmark and zoning regulation; the property usage permit in that location can also influence its market value.
Property Type
This determinant can be categorized into two (2), they are residential and residential properties.
The price of a residential property is determined by the building type, whether it is an apartment, condo, duplex, etc. The number of rooms and available facilities including outdoor spaces, parking spaces, etc are also taken into consideration.
Commercial property values are influenced by factors such as office outlets with their number of rooms, single retail outlets, industrial business spaces, etc.
Title Document
Property titles clearly state the ownership right to the property. It proves that the seller has the legal right to transfer ownership to the buyer without any consequence. A valid property title confirms that the property is legally valid and that the buyer is protected from any legal issue.
Essential property title document include;
- Certificate of Occupancy; which gives the buyer an ownership right over the property for 99 years after which renewal is required.
- Governor’s Consent; this document validates the legal transfer of property from the previous owner to the new owner. It serves as a proof of legal transfer in the transaction process.
- Registered Survey; it is simply a survey record of the property that is registered with the government authority. It recognizes the last registered owner as the one with the legal right to transfer the property ownership to another.
Property Condition and Features
This refers to the physical state of the property that is usually assessed during inspection. A new or well maintained property would be valued more than an old property in the market. Elements of this value determinant include;
- The age of the property
- The physical structure condition and maintenance
- The cost of renovation required (if needed)
- Is it a fully serviced property
- Availability of sustainable and smart features
Property Use Permit
Property use permits state the specific authorized use of the property in the local market. For instance, some properties are marked as commercial zones (business districts) while some are marked for residential zones (living spaces). Real estate properties with flexible or mixed use permits have more value than ones with single use permits. These usage permit and zoning regulations have great influence on the property market value. Most buyers prefer to acquire properties located at mixed-use zones because it gives room for free development.
Conclusion
Understanding the various factors that determine property value gives you the confidence to negotiate when acquiring property. You will know if your intended property investment is worth the value after it has been appraised based on these determinants.
You can also seek the guidance of a real estate representative for other influencing factors not listed here. With your knowledge and their guidance you can confidently invest in properties that align with your financial goals and aspirations.
