What is a property actually worth? The answer may vary depending on if you were to ask a real estate agent or a valuer working for a mortgage lender. It’s important to understand that appraisals and valuations are distinctly different types of assessments, employed for specific reasons.
Here’s a list of factors that may be considered when either appraising and/or valuing a property:
Location
The location of a property is one of the most significant factors in determining its value. Desirable areas, such as those close to the central business district, schools, public transportation, and amenities, tend to have higher property values.
Property type
The type of property, whether it's a house, apartment, townhouse, or vacant land, affects its value. Different property types have different market dynamics.
Size and layout
The size and layout of the property, including the number of bedrooms and bathrooms, as well as the overall living space, impact its value.
Condition
The condition of the property, including its age, maintenance, and any renovations or upgrades, can influence its worth.
Comparable sales
Real estate agents and appraisers often use comparable sales to determine a property's value. They look at recent sales of similar properties in the same area to gauge market value.
Market conditions
The state of the real estate market at the time of valuation can greatly affect a property's value. In a seller's market, prices tend to be higher, while in a buyer's market, prices may be lower.
Economic factors
Economic factors, such as interest rates, employment rates, and local economic conditions, can influence property values.
Zoning and regulations
Local zoning laws and regulations can affect what you can do with a property, which in turn can impact its value.
Infrastructure and development
Upcoming infrastructure projects, such as new highways, public transportation, or commercial developments, can significantly impact property values.
Environmental factors
The presence of natural features like waterfronts or parklands can increase a property's value, while environmental concerns or hazards can decrease it.
Rental income
For investment properties, the potential rental income plays a crucial role in determining a property's worth.