If you have plans of selling your home in the future, you’re gonna need to find out how much your house is worth, yes?
Well, property valuation, also known as real estate appraisal, is the process of evaluating how much the house would be worth if it were placed on the market for sale.
Estimating the price of your property is the first step towards attracting prospective homeowners to take an interest in what you have to offer.
Here’s more information of what exactly property valuation entails, and the factors affecting the process!
First, you need to know a little more about property valuation Market value:
This is the estimated amount that the property is likely to fetch on the day both parties (namely, the buyer and seller) enter into an agreement.
It’s the price which has been agreed upon by all parties involved in the transaction.
This is different from the asking price, which is the amount that the seller of the property quotes to potential buyers when negotiating the exchange process.
The actual valuation process is an estimation of how much money the property is likely to be worth.
A valuation is carried out by authorised firms and their representatives (usually banks and their associated valuation experts) after having taken into consideration recent property transaction prices, as well as other market factors.
Benefits of having your property evaluated
There are several instances when you’d need to know your current property valuation. For example, you may be planning to carry out major renovations in the near future, prior to selling your home.
In this instance, you must find out the value of your home after having altered it, or after having lived in it for a considerable amount of time.
This is to make sure that you know exactly how much your house is worth so that you can maximise your profits in the event that you wish to sell your home, and sell it fast.
Factors that affect property value
1. General economic trendsPeople will be more inclined to buy homes in cases of an economic boom, where employment, salary levels and labour markets are all on the rise.
During these times, people will also be more willing to spend more on properties, which will likely drive up the prices.
As a result, it wouldn’t be unreasonable to ask for a higher price, especially if you’ve received a high valuation.
2. Location of propertyIs your property located in a neighbourhood that is highly coveted by prospective homeowners for the amenities, or is a stone’s throw away from major central landmarks, offices, and buildings of public interest?
Or perhaps it’s very well connected, with a variety of buses and trains which serve the area? These are some factors that can make a property highly valuable and attractive in the eyes of many interested buyers.
3. Conditions of general property marketAnother thing to consider is demand and supply patterns in the property market. Do check to see if houses in your particular area are preferred by buyers, as opposed to other neighbourhoods.
But, if nearly every other house in the area where your property is located goes on the market at the same time, you’ll have a harder time trying to convince potential homeowners why yours is the superior one.
4. General demographicsIs your property in an area occupied mostly by expats? Then they might be interested in smaller, more compact high-rises where they can be part of a larger community and with multiple tiers of security.
If it’s situated in a neighbourhood with young professionals and growing families, then prospective buyers may prefer larger homes to accommodate more people.
5. The property itselfNaturally, a bigger property (more floor space) will command a higher valuation than a smaller one in the same neighbourhood.
If the property has any amenities such as around-the-clock security, swimming pools, gyms and/or parking spaces, buyers will be willing to part with a larger sum just to secure these extra perks.
Additionally, whether it’s a freehold or leasehold property will also influence people’s purchasing decisions.
While the owner of a freehold title owns the property indefinitely, the owner of a leasehold title ceases to own it after the tenure has expired.
As a result, more people typically prefer to purchase freehold homes.
6. Recent renovationsIf you’ve recently made renovations to the place, particularly major ones such as upgrading materials or erecting a partition in one portion of the house to create more private spaces, the valuation of the property will be affected.
Even touch-ups to improve and uplift the overall quality of the property for the new owners will contribute to a higher valuation for the property.
The Property Valuation Process in Malaysia
If you’re interested in purchasing a property in Malaysia and wish to apply for a home loan from the bank of your choice, they’ll conduct an independent valuation of the property you intend to buy.
A bank-appointed valuation expert will arrive at a final valuation of the property after taking into consideration recently transacted sales of similar properties, as well as inspecting the property to know more about its current conditions, liveability and renovations.
These recorded sales can be found with the Valuation and Property Services Department (JPPH). Once everything is complete, their findings will be detailed in a valuation report, which will then be submitted to the bank.
Do note that any home loan the banks lend you will be based on this valuation figure, and that you’ll also have to pay a valuation fee to the people providing the service.
While there’s no way to determine exactly which valuation method might be preferred by the people who are in charge of the valuation process, here are a few commonly employed ones:
To sum it all up, the selling price of your property can be affected by many factors and depending on the valuation method chosen, it could either leave you with extra cash or less.
So when it comes to investing in property or selling your current one in hopes of reaping great returns one day, don’t forget to consider all these factors that come into play:
As long as you do all your research and engage the right professionals to assist you with the property valuation process, you’ll find that putting up your property for sale in Malaysia is not that big of an ordeal (plus less headache too)!
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