The pandemic has upended the housing market in ways no one could have seen coming. For example, did you know that 97% of homes in cities across the U.S are now considered "overvalued"?
If you're looking to buy or sell property, determining the right value of a property is more important than ever. The most powerful tool for determining value is Property Valuation. In this article, we will explain in detail what Property Valuation means and how it works.
What is Property Valuation?
The goal of Property Valuation is to provide buyers and sellers with information about the features, costs, and benefits or disadvantages of owning or selling a certain property. These valuations help buyers understand the actual worth of the property they're purchasing.
The value of a property is not determined by its cost to purchase or sale price. Although both factors can play a role in accessing value, properties can easily be sold for far below or above what they are actually worth.
How are Property Valuations Done?
Property valuations get done through appraisals. An appraisal is an estimate of the value of a property created through a value report. The value report is based on several factors, including market trends, property features, and property inspections.
Appraisals are typically carried out by investors, agencies, mortgage companies, or property management businesses. Individuals can also do their own appraisals, although this is something best left to be done by professionals.
Why are Property Valuations Important?
Property valuations are important because they help real estate investors avoid the pitfalls that come with owning and selling real estate. Valuations protect against fraud, scams, and overpaying for a property. Without a proper valuation, it's easy to get roped into a bad investment property deal.
Property Valuation for Buyers
Property valuations come with several benefits for buyers. Let's take a look at a few of them.
Insurance
An often overlooked aspect of buying property is the cost of insurance. Property valuations help owners receive the right insurance against any losses or damages to the property. Accurate valuations guarantee owners don't pay more to insure their property than they have to.
Property Tax
No one likes paying taxes. However, property taxes are an inevitable part of owning property. Inaccurate tax reporting for a property can lead to severe penalties and fines from the IRS.
Up-to-date property valuations help avoid these penalties and fines. This is because the value of a property is a necessary component in determining how much property tax must be paid. Get a property's valuation correct, and property tax will follow.
Selling the Property
Buying a property is one thing, but what happens when you decide to sell it?
Property valuations are as important for buying as they are for selling. An accurate valuation makes the sale process a breeze because it establishes the best range for maximizing your return on investment (ROI). If the property just isn't worth selling, you'll know right away through its valuation.
The Bottom-Line on Property Valuation
Property valuations make or break the purchase and sale of properties. Without them, there is almost no way of determining what properties are truly worth. Whether you're a new landlord or seasoned real estate investor, making valuations is an essential part of building your business.
Are you interested in property management services just like this Property Valuation? Contact us today to get started!
