The process of determining the price of the property and valuing it is one of the most important pillars of buying and selling and dividing the heirs and others in the field of real estate. Real estate, assessing assets for the accounting books of major companies, undertaking real estate insurance, and determining the value of taxes on real estate “real estate taxes”. But for most people, determining a fair price to buy a house, apartment or plot of land is the most useful real estate appraisal app. In this blog, we show you an introduction to the basic concepts and methods of real estate appraisal and the foundations of real estate appraisal, especially with regard to buying and selling real estate.
First of all, you should know the differences between real estate appraisal and real estate appraisal
Valuation of the property: The valuation is from the price, and the price is what you actually pay to buy the property, and the price is the amount written in the sales contract.
Real estate appraisal: The evaluation is from the value, and the value of any property is determined from the benefits that the property owner obtains from owning the property, and the value of the property is determined by resident experts, as the value varies from one property to another according to its location, finishes, construction year, and other things that we discuss in this article.
How do you determine the value of the property?
From a technical point of view, the value of the property is defined as the benefits that the property owner obtains from owning the property, unlike many consumer goods that are used quickly, the benefits of real estate ownership are generally achieved over a long period of time, so estimating the value of the property must take into account Consider economic and social trends, as well as government controls or regulations and environmental conditions that may affect the four elements of value:
- Demand: the desire or need to own the property, and this desire or need must be supported by money in order for the desire to be satisfied.
Utility: The ability to meet the desires and needs of future property owners.
- Scarcity: the limited supply of real estate competing with the real estate being purchased.
- Transferability: The ease of transferring ownership of the property from one person to another.
- Offer: Availability of completed properties, whether new or used, for sale.
The ten factors that affect the price of real estate:
1. Economic cycles and the speed of capital circulation affect buildings and are called (economic factors).
2. There are other factors that have a significant impact (laws, regulations, and general legislation), and others are laws, regulations, and legislation related to privatization, rents, construction, demolition, permits, and other elements.
3. Also the tastes of the people and the average income of the economic and social conditions that affect the valuation of real estate.
4. Income or return plays a role in the price of the property, so the price is affected by the return.
5. The size of opportunities (supply and demand) that exist, whether for sale or demand, affect the unit values.
6. The expectation of future prices, which is related to the real estate market and future investment, and the prices of buildings and units are greatly affected.
7. Factors of production, which differentiate between the price of real estate in different regions.
8. There is also something that affects real estate values called (opportunity) cost.
9. One of the biggest factors that greatly affect the price is the total area and location of the unit.
10. The environment is one of the most important factors that have a direct impact on the type of building and it is called (natural factors).