People who own real estate property and want to sell, often invest in the property. These investments may include hiring of a broker to sell the property, repair costs, etc., to make the property. 

Usually, the market price is what a willing buyer will pay for a property and what the seller will accept for it. The transaction that takes place determines the market price, which will then influence the market value of future sales. The price of the property is determined by the local supply and demand, the property’s condition and what other similar properties have sold for without adding in the value component.

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Will the valuation of the property decrease based on the number of days it remains unsold in the market?

Days on market is a term which is used to identify the time period that a house stays on the market. When a house doesn’t sell quickly, it can seem to have some inherent defects. Many buyers are under the belief that if a property is on the market and has not been sold, there is something wrong with the property. 

The few reasons as to why a property goes unsold for a long time are – 

  • The market price is too high – every real estate property can be said to have a specific value. An asking price which is above the valuation of the property will end up being on the market for a long time.
  • Condition of the house – there may be a situation where the house is in a poor condition. No buyer wants to have a property in which he would have to invest in order to repair the property and make it habitable. 

The valuation of a property is a detailed report of the property’s market value. It is seen to be the estimated sale price that may exist between a potential buyer and the seller after due diligence regarding the property has taken place. 

It is seen that when a property is said to be on the market for a long time, it will affect the valuation of the property. If there are other properties in the neighbourhood which are similar to the property and have been sold except for the current property, it will affect the valuation of the property. This is because potential buyers will avoid the property and may assume the presence of defects in the property, such as a defect in the features of the property, the neighbourhood, the condition of the property, etc. 

Will the mortgage of the property value affect its valuation?

It is important to focus on mortgage rates, as these rates have a direct influence on the price of real estate property. The changing rates of interest can not only affect the price of the property but will also influence the demand and supply of the property in the real estate market. When the mortgage interest rates are low, buyers can afford to spend more on a house. At lower interest rates, their monthly mortgage payments will be lower, and thus, they will pay less over the time period of the loan.

When the mortgage interest rates increase, the affordability of the property decreases for potential buyers. They cannot afford to spend as much as they had wanted to spend on the initial purchase price because, with the increased interest rates, their monthly mortgage payments will also be higher and thus, they will have to pay more over the time period of the loan.

The changes that occur in the mortgage rates not only affect the potential home buyers, but they affect the sellers as well. When the mortgage rate increases, the property loses its value because people have to pay more to buy the property at higher rates. Before the interest rates rose, the property may have been in the price range of 30 prospective buyers. With the higher rates, this number of potential buyers may have decreased.

Is the value of my property equal to the amount of money spent on it?

The valuation of a property is not equal to the amount of money that is spent on it. In real estate, most consumers looking in a particular area and price range know which properties are for sale and can determine price and value quickly with the help of the Internet.

 The valuation of the property depends upon the following factors – 

  • Location of the property

The location of the property affects the valuation of the property. Factors such as being close to the city, public transportation, shops, schools, etc., all affect the valuation of the property.

  • Supply and demand 

If there is a sudden demand for property in the real estate market, the prices of the property may rise. This will lead to a higher valuation of the property, as more people are interested in the property.

  • Neighbourhood 

The greater number of people that want to live in a particular area, the higher is the demand of such properties in the locality. The type of people that live in an area also influences the valuation of the property.

  • Size and facilities that are present with the property 

The size of the property and the amenities that are present along with the property is also considered as a factor.  

Conclusion

It can be seen that the valuation of a property depends on several factors. It is important to conduct the necessary due diligence that is required before buying a property. The due diligence can either be conducted by the buyer on his own or with the help of a lawyer. It is important to not only look at the property but also the locality and the area in which the property is located.

The amount of money that is spent on the property may or may not be equal to the valuation of the property. The expenditure that is done on the property may help in increasing the valuation of the property, however, it is not the only option of increasing the valuation. The valuation of the property depends on certain external factors also, such as the age and the condition of the property, the locality, and area where it is located, the presence of amenities nearby, etc. it is important to make an informed decision before purchasing real estate property.