Calculating the sale price of a property using the "pi times thumbs" method is not a good idea. But how do you calculate the value of a property? And who is the right expert to determine the selling price?
In principle, anyone can set the selling price for a house or flat themselves. Perhaps there have been sales in the neighbourhood that you can use as a guide. But be careful: every property is different. If you set the purchase price too low, you will lose money. If you set the purchase price too high, you will scare off potential buyers.
Properties should be offered at a realistic price from the outset. But what price is realistic? On the open market, properties are usually offered at an estimated market value with a slight margin upwards. Three different methods are available to determine a market value: the comparative value method, the asset value method and the capitalised earnings value method. The market value determined in advance may or may not be identical to the purchase price of the property at the end of the day. Ultimately, "the market determines the price".
On the internet, property portals offer online valuations: "Estimate property value in three minutes". However, this advertising already makes it clear that the results are only to be understood as an estimate; it is usually an average value from a range of a "lowest" to "maximum" price.
A brief description of the valuation methods: The comparative value method compares similar properties with similar features in the same location. This method takes into account the current market situation. The asset value method is primarily used for 1-2 family houses and is mainly applied if there are no comparable properties in the region. The asset value of the property is determined taking into account the standard land value and the production costs as well as depreciation. The income capitalisation approach determines the market value of rental or leasehold properties based on their income and land value. Future income is also included in the calculation, for example the expected rental income and rent increases.
The comprehensive determination of the market value with an appraisal by a sworn or certified expert is particularly appropriate in the case of sale, but also in the case of divorce, inheritance or after extensive renovations and is often ordered by a court.
Of course, the owners know their property well, know what they have paid in the past and what they have invested in the meantime. It is safer to have the market value determined by an expert before the house or flat is offered for sale.
At AllGrund Immobilien, each such valuation is prepared by a certified valuer; on the website www.allgrund.com there is also an online tool for determining a "rough" property value; if you send it in, you can even receive a somewhat more precise and more refined valuation free of charge if you intend to sell.
Photo: © Efraimstochter, Pixabay
