Factors that Determine the Value of your Condo
When selling or buying a condo and other real estate investment, the key element to realize is its price. Real estate properties and investments valuation are not as straightforward as pegging its purchase price. There are several factors that contribute to the proper pricing of a condo or a house. The variations of factors specific to a property make it difficult to come up with the correct price point that is not too low or too high for its market value. We want to buy or sell properties based on what we perceive its worth, most specifically what we’ve invested and projected income out of it.
To set the value of properties, owners and investors will normally take the purchase price and add any upgrade expenses they incurred on the property. That equation is one-sided as it only considers the idea of the seller and totally ignored the other side of the coin – the buyers and the amount they are willing to pay for it.
Here are the factors that real estate experts and professionals use to set the value of properties;
- Average Sold Price
This is the price current buyers are willing to pay for a property. A real estate agent will pull up historical data, usually up to many months back of sold properties that are similar to the property that he or she is valuing. Similar properties are those that are about the same size, neighborhood, number of bedrooms, the age of the building, building amenities and other characteristics.
- Average List Price
This calculation is similar to the average sold price, only this time, you are considering or checking into the list prices of properties on sale. The realtor will incorporate data of properties listed that have similar characteristics as that of the property he or she is assessing. This is the price that other sellers are willing to accept for the sale of their property.
- Average Days on Market
This is not a price point, but the average days on market is a significant data to consider when listing or buying a condo. The real estate agent will normally take data from six or three months back. The Average Days on Market of recently sold properties indicate the demand for the same property. While the Average Days on Market of similar properties listed show the probability of the same property being sold. Both buyers and sellers of condos can use this information. The sellers can set the price accordingly – lower the price if they want to sell quickly, and the buyers can set their price range accordingly.
- Unique Features
This is another non-price factor that will hugely impact the pricing of the condo or any other real estate property – anything unique to it. Positive features that could increase its value include celebrity association, historical significance, incomparable views, exceptional design and architecture. While features that would decrease its value include death or crime that occurred within the property, previous natural calamities that could repeat, issues regarding its ownership and a declining neighborhood.