Property valuation helps in determining the asking or sale price of a property. Read this article to get an insight into the purpose and benefits of Property Valuation.
Real Estate business contributes to the national as well as your personal wealth. Every country has some rules and guidelines for property valuation and management of real estate finances.
Property valuation is also a part of real estate planning and management. There are plenty of rules and regulations to follow to have efficient property valuation and transactions.
Property valuers prepare a report about the property after considering all the factors that can affect its value. That report can be useful for you to carry out various transactions and deals related to that property.
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Let's first know what property valuation is, and then we'll come to its importance.
What is a property valuation?
In simple terms, property valuation is a detailed report of the market value of a property based on its location, condition, and various other factors.
It can be impossible for you as a lender to understand the money required to buy or sell a property without having valuable information about the property market trends.
The International Valuation Standards Council defines it as the estimated sale price "between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion."
It is to be noted that the sale price is usually different from the values mentioned in the reports because it is nearly impossible to predict how people's emotions, market knowledge, and other factors might affect the negotiations.
Yet, property valuation gives you all the valuable information that can help you to negotiate appropriately and get the best deal as a buyer or seller.
Why is it important?
There are a lot of reasons why you should get your property valued. From providing a competitive and fair rate for your property to calculating different taxes on it, you can accurately do everything once you get your property valued.
Scrolling down, you will find the top 6 reasons why Property Valuation is essential.
For Buying or Selling a Property
Before buying or selling a property, it is essential to get it valued. The valuation can help you to understand the fair market value of the property.
A property valuation professional will visit your property and assess its current worth in the financial and real estate market, considering all the factors that determine a property's value.
To Rent a Property
Property valuation will help you determine the fair and competitive rent for your property if you are looking for tenants.
You will have to provide an accurate cost to your possible tenants. The suitable rent is usually 6-10% of the estimated price of the property.
To Mortgage a property
If a buyer wishes to seek a loan against the property as security, valuation is necessary in such a case as well.
The estimated price of the property considerably influences the amount of loan.
To Transfer a property
In case an individual wants to transfer their property to someone else, they will need to estimate its value first. The worth of the property will decide the stamp duty.
For taxation purpose
There are various taxes on property like wealth tax, vacant land tax, ground rent tax, property tax, municipal tax, etc. which are to be paid to the various departments of government. While calculating these taxes, the estimated value of the property is taken into consideration.
If an individual or organization declares bankruptcy, then their properties can be acquired.
In such cases, before acquiring or auctioning off the property, its valuation is done. This helps to determine factors like the base price for the auction.
All in all, the above article concludes that before carrying out any financial transaction related to the property, it is advisable to get it valued. A valuation can help you understand the property market's current trends, calculate taxes related to your property, and always crack the right deal for your property.
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