Part of your success as a property investor and landlord lies in your ability to know and understand your portfolio completely. If you know your real estate assets well, you can make informed decisions that can lead to incredible growth. You can come up with strategies that can position your property to achieve maximum revenue potential.
One of the important details that you should know is the value of your property. This is an ever-changing number that rises and falls depending on the current conditions of the property market.
This is why property valuation is a skill that all property owners should learn and understand. It’s more than just crunching numbers. It involves a comprehensive analysis of the different factors that affect your property’s worth.
In this article, you’ll learn what property valuation is all about and how you can calculate the value of your property. You’ll discover how to evaluate your property so you can navigate the complex property market in London.
What is Property Valuation?
This refers to the process of evaluating a property to determine how much it’s worth at a certain period. The time element is a key concept when it comes to property valuation. The value of real estate assets changes over time and it’s heavily influenced by economic factors and the movement of the market.
If you want to use this information to make the right decisions and strategies for your portfolio, it’s imperative to get the current value of the property. You can’t just rely on the selling price you paid when you bought it. You have to determine the latest value of the property. You might be surprised that the value has increased or decreased since then.
The question is, how do you go about doing this property valuation? In most cases, you can probably determine your property’s value on your own – as long as you completely understand the factors affecting it. But if the valuation is needed for official documents like property taxes, insurance or any other legal requirement, you’ll need to get a surveyor or a professional appraiser to do the property evaluation report for you.
When you work with a professional, you’ll get a complete report of your property’s condition and the factors affecting the property value estimates.
What Affects the Value of a Property in London?
There are several factors affecting the value of a property in London. Familiarising yourself with these factors won’t just help you calculate your property’s worth. It can also help you take steps to influence these factors so they won’t negatively affect your property.
For instance, a property’s condition is one factor that affects its value. By keeping a property well-maintained, you can sustain its current value or even improve it.
Here is a list of the other factors that you can use to determine the value of a property.
The location of a property has a huge influence on a property’s value. There are many factors affecting this. The nearby amenities, public transportation, tourist spots, developments, etc. influence the demand for living in that particular location. The higher the demand to live in that place, the higher the property values in the area.
To determine the property value based on the location, you simply have to look at comparable properties within the same neighbourhood. Check the average selling price to get the value per square foot. You can get this data from online property sites or real estate agent listings. It’s best to look at 5 to 10 similar properties to get a better estimate.
Taking a look at the general feel and vibe of a neighbourhood will give you a great idea of what it’s like to live there. You can drive around and talk to the residents to understand the pros and cons of living there.
After the location, the type of property will affect its value. The bigger the property, the more valuable it is. So if the average price per square foot in the location is £500, a 1,000 sqft unit has a value of £500,000 while a 1,200 sqft property is £600,000. Make sure you include both internal and external spaces in your calculations. Sometimes, the bigger the lot size and outdoor space, the more valuable a property is.
You can also do a more thorough calculation by doing it per room. Master bedrooms are valued higher than secondary rooms.
A well-maintained property will have a higher value compared to a more dilapidated one. Check the interior condition of the property as well as the exterior. You can also consider the curb appeal because it has a huge impact on the perceived value of the property.
As for the interior, walk around from room to room and see what it feels like to live on the property. Is the bathroom accessible from the bedroom? Or does every room have ensuite facilities?
You should also check for any leaks, moulds or pest infestations. These can all compromise the property’s value so these have to be dealt with immediately.
Features and Improvements
The amenities and special features of the property can also add to its value. If your property has an open space or a balcony with a beautiful view, that can significantly boost its value. If the kitchen is equipped with modern appliances, that can also be considered additional value. If your bathroom has a bathtub or a jacuzzi – these will improve the value of your property.
Make sure you take the countertops, special furniture, hardwood floors and unique stoneworks into consideration. The quality of these features will affect your property’s valuation.
The exterior should also be considered. We talked about the curb appeal and how it affects the perceived value that people have of the property. Generally, the more aesthetically appealing a property is, the more valuable it seems. But if you have more outdoor space for a garden, a beautiful walkway and other amenities outdoors, this can also increase the value of the property.
While the property itself has a major influence on its value, there are also external factors at play that can affect the value of a property. It’ll be wise to consider these factors because knowing how to read them will even allow you to foresee how your property will be valued in the future.
Among the external factors that you have to monitor include housing prices, mortgage rates, housing developments and various economic indicators (e.g. inflation rate, consumer price index, employment rate, currency strength, etc).
When analysing these factors, it’s important to look at both current and historical figures. You need to compare both so you can make the right assumptions or deductions about where the property market will turn. With this knowledge, you can determine what strategies you can implement at the right time. Remember, timing is also very important in the property market so you need to make sure you’re not just doing the right thing – you have to be doing it at the right time. This is how you can preserve or improve the value of your property.
How to Get a Property Appraised
The process of getting the value of your property is called a property appraisal. It involves the careful inspection of the property so it can be evaluated and assessed.
Here are some of the common questions asked about property valuation and appraisals.
Why do you need a property valuation?
There are business and legal processes that require a property valuation – like when you plan to buy/sell the property or you want to know your tax obligations. Sometimes, it’s also needed during a divorce or alimony settlement.
In these instances, you need to get a professional to appraise the property for you. If it involves a court proceeding, you’ll be required to get appraised by someone who’s accredited by the courts. Make sure you’re getting the professional services of someone whose property valuation report will be acknowledged and recognised by the entity to which you’ll submit it.
Who can appraise a property in London?
This is something that you can do – but only for estimation purposes only. The process requires a lot of time and expertise – so if you want to get it right, you either have to study how to do it properly or get a professional to do it.
As mentioned, there are instances when the courts or your mortgage broker will require you to get your property appraised by someone accredited by them. That’s something that you have to comply with.
Most people turn to real estate agents when it comes to getting a property valuation. When you’re buying or selling a property, the valuation can be a part of the service that agents will provide.
You can also get appraisers to do it for you. These people are licensed surveyors who can provide valid property valuation reports that are accepted by most banks.
Tax assessors can also conduct property valuations – but their processes may be more generalised to the location so they might miss the special features that are unique to your property.
How much is a property valuation?
A property valuation fee will depend on the surveyor or assessor that you hire to do the job. Their reputation will surely dictate their prices so make sure you do your research well.
The price that you’ll pay will also depend on the type of property being evaluated or appraised. But you should be prepared to spend around £200 to £600.
Take note that even if you don’t hire a professional to appraise your property, you’ll still have to pay fees to complete the property valuation. So if you want to get a valid property valuation report, you might want to go down the professional route so you don’t make any mistakes.
Get Help with Property Valuation
Getting an accurate property valuation is crucial because it’s a strategic part of your portfolio’s growth. Your property’s value will allow you to make informed decisions that can maximise the potential of your property returns.
Partnering with professionals is one of the best ways that you can get this task done right. Property management companies like City Relay can lend expertise and network connections to ensure that you’ll get the right property valuation report.
If you want to unlock the true worth of your property, get in touch with City Relay. Let our property experts help you unleash the true potential of your portfolio.