How to Really Determine Property Value
For those who are willing or motivated to sell their property, the best first question to ask them is: Are you willing to buy the property for the price you are selling it? This gives a very good inkling on the price they have set. Next, is asking from long time nearby neighbors if they would buy the property for price it is being offered. From that alone it will already give you a good idea of the value for the property.
Neighbors will provide information on why or why they will not buy the property for the price. What are important to many are the neighborhood and its immediate vicinities. Normally a good neighborhood will command a better price than high end community with large properties known to be owned by questionable people! Of course what is being pointed out here are properties with houses constructed on them.
Consider preferences of those interested to buy properties. If there is a good reliable survey on preferences research or get a copy of it. There are those who prefer countryside or outskirts and there are also who like it better near or within business districts. No matter how cheap a property is but no one has a liking for it then it almost has no value at all!
For example, you have a real close friend or client that wants to buy cheap large tracts of land and hold on to it, then you have buyer that only a few would have. You know his preference. With this, determining property value for that buyer has its set parameters. It will be a simple matter of knowing the market values of lands surrounding that you intend to invest in. With or without structures is not a concern here.
Properties with houses always have a standard for determining property values. Current market value, latest sales in the vicinity, certified appraisal and competitive market analysis are among the common ways. For the house or structure itself, it is important to know the type of construction and materials used in them. Knowing it will give a good estimate on how it would have cost per square foot to construct the house. Consider the age of the structure because with older ones you will have to deduct some depreciation from the time it was constructed.
Remember always that there are many beautiful and well constructed houses in the wrong place. They are frequently appraised high for the structure but not for the land value. It can probably even have high tech facilities and security because of a bad neighborhood! So determining the value of properties like those should not be addressed in the standard manner. Use common sense and logic in assessing the true value properties of that kind.
Determining the property value of mortgaged properties should be looked at from a different angle. Do not consider interest that has been paid as part of the value. If ever, consider it only for the future value if it will be reasonable or not for appraisal. Real estate investors should only consider the value that the property has and to be flipped within a short time.