Just like buying, selling a home is also a tedious task. You need to work upon many factors and points to finalise the best deal for your home and at the same time to earn higher profits. However, many approaches exist in the realty market which helps in evaluating the best price of your home. Take a look at some of the common approaches:
Sales Comparison Method
This is one of the common and widely-used approaches that are used by many homeowners to evaluate the best price of their home. In this method, the owner compares the sale price of other similar properties in the market, based on which he/she evaluate the value.
- Firstly, you have to list down the best and exclusive features of your property. It may include location, age, size and the current condition of the property.
- Secondly, you have to find out two or three properties which have similar features as yours and that is sold recently or not more than six months ago. Don’t get confused. These days many online web portals are present which can help you in searching such properties. All these properties must have 70% of similar features. Also, find out any special characteristics they have.
- Now, compare and research what your property possesses and what not. For instance, there are three such similar properties in your location that are sold within a month or two. Take out their average property price per sqft and then multiply it with the total area of your home. With this, you can take out the best price of your home.
- Keep in mind to finalise the most accurate price as the value differs from one home to another.
Under this method, an owner has to calculate the land price and building price separately and then merge it to arrive at a final price.
Steps to Access Land Price
The price of land can be accessed via various parameters such as the sale of other built-up properties in the locality, shape, frontage on the main road, zone use, & plot coverage and floor area ratio.
For example, in most of the cities, the urban-local authorities access the value of the land to prepare the urban tax chart. This can help an owner in getting the price of the land. Besides this, the price fixed by housing authorities can also be used to get the value. On the other hand, the price of the land plots which are located inside the city boundary can be accessed through the guideline value.
Steps to Access Building Cost
There are two formulas for accessing the building cost is:
1) Total cost = Value of building + value of Plot
2) Total cost = Total area x 10% of reproduction cost + value of plot
Price Comparison Method
This method is commonly used for properties which need redevelopment. Here, the owner knows that the prospective buyer will not pay more money for the property as it needs renovation and they have to put more money into it after buying.
- First, the owner has to access how much they have to spend in the redevelopment of the property. It may be the structure or to encapsulate it with modern technologies and construction materials.
- After this, calculate the value of the property particularly the depreciating one that arose due to changes as well as market rates and trends.
- Once you are done with this, you will arrive at the final pricing of your home.