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How Much Is This Real Estate Property Worth?

Nov 2, 2007
The most important part of dealing with real estate is being able to tell what a property is worth. This value will tell you whether a given investment will be ultimately profitable, or it will fail. Therefore, you should establish a way to estimate the value of a property. It should be a flexible system that can apply to multiple properties, and it should take many different factors into account. If you stick with properties in the same area, you will figure out a basic formula that you can use. Here are some of the things you need to consider.

First you have to look at the location. If it's a residential area, you should look for statistics about home sales in the area. See what the rate of sale has been in recent years, and find out if sales have slowed down or sped up recently. Then, of course, look at average sale prices. If you compare these houses to the house you're considering, then you will have a basic starting point for the price. If you find the most similar house possible, you'll be even better off. Otherwise you'll have to compare relatively based on features and locations.

Next you should consider additions that have been made to your property that make it stand out from the rest. Is the basement finished? That will add to the final value of the house. The same applies if the yard has had professional landscaping, or the home has features installed such as a security system. Make a list of all of the features that are present in the house you are considering, and add their value to your estimation. At the same time, you need to consider the negative aspects of the property, such as poor plumbing or peeling paint.

If you don't feel like estimating all of these factors by yourself, then you can use the appraisal services of various realtor groups. Usually the cost is very reasonable, and you can get a close estimation of what exactly the property will be worth. However, if you're analyzing dozens of prospective investments per day, it isn't reasonable to pay for every appraisal. So, practice a bit on your own, and use appraisal services when necessary, and eventually you'll figure out how the system works. It can be difficult for beginners, but once you figure things out it is a rewarding and exciting industry to be involved with.
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