Principles To Measure The Value Of A Property

by Rajesh Kumar
(Noida)

The value of real estate market is more likely the price that a buyer is willing to pay a seller for a property in a normal market operation. Now this price depends on many factors and there are different principles that are used to determine the value of a property.


Value by the seller

A seller is free to set the price for the property that makes the sale. Often, the price for the property is set at a figure above the price the seller is willing to accept, to give room for any negotiation. Even the price that the seller is willing to accept not necessarily reflects the exact value of the property.


Value by the buyer

A buyer is free to offer any number of attempts to acquire the property and often offer below the maximum price he/she is willing to pay, to give room for some negotiation. Of course, many factors can affect the transaction. Although the seller is under no pressure to sell, the quick decision (and receipt of proceeds from the sale) may tempt the seller to accept an offer price that is less than ideal.

Principles that determine the value of a property

• Substitution Principle - The property value is influenced by the cost of acquiring a comparable property, i.e., having similar features design and construction, or functional use, that property is being considered


• Principle of highest and best use - A property reaches its highest value when given more profitable use permitted by the legal framework of the physical environment in which the property is cataloged. Determining the use of a property must be part of any assessment because the appraiser attempts to identify the economic factors that may be more lucrative to the different uses that can give the field at different stages.




• External Factors - According to this principle, external factors can influence property value of it.


• Supply and Demand - The cost of any property will always be determined by the number of other similar properties for sale and its relation to the element number of buyers in the market.


• Balance - A market in equilibrium will tend to have more properties available for sale than buyers. It is said that the uses of the properties are in equilibrium when a sufficient number of offers of complementary types of properties are available, i.e. when the number of housing units maintained in proper proportion to the number of commercial and industrial units offered.


• Change - Give her long life, there are factors that affect the value of the property, whether physical or economic.


• Compliance, progression and regression - the value of a house that is at odds with others in the neighborhood can have positive benefits.


• Growth, balance and decline - The sharp deterioration of the physical effect dictate that all property passing through the aforementioned


• Anticipation - its value is assumed to increase with time


• Improvements - The contribution of an improvement to the property value is measured by its effect on market value


• Law of Increasing and Decreasing Earnings - Improvements that create a proportionate increase in value tends to be acting to profit. When no further improvements are there, then it marks the decline.