The determining factors of influence on the value of real estate is an element of great importance in the evaluation work.
The main factors influencing the property value can be classified as follows: objective factors and subjective factors.
Objective factors are general factors that affect the size of the market value in any situation, regardless of views and wills.
Subjective factors reflect the will and behaviour of participants in the process of sale – buying; they can be divided into psychological factors, risk factors, competence, attractiveness, information.
Another factor classification that directly influence real estate value is:
External factors are factors classified as follows:
They give us the general situation of the economy of our country or a specific region such as Birmingham. In this group are stipulated factors which influence a lot the supply and demand.
The offer is affected by the following factors:
– A large number of new construction. Free real estate stocks which are exposed to sale on a particular segment of the housing market;
– Correlation of construction costs and prices for commercial real estate;
– Real estate tax
The demand for land is affected by the general economic situation:
- Employment of the population;
- The salary and population income;
- Solvency of the population that is characterised by current revenues;
- Variation in the number of population (historical trends, current and projected);
- Changes in the population’s preferences;
- Low inflation;
- Availability of credit;
- The size of the interest rate;
- Size costs associated with the transactions;
The economic factors reflect the general economic situation of the country, region or locality.
They have a large influence on the property, which includes the particular features of the property such as social economic and political situation in the country or the world, region, industry development trends, the scope of activities of commercial property.
Natural and environmental factors:
The evaluator must be able to detect harmful factors or other factors such as:
Soil corrosion influencing value through productivity;
- High seismicity;
- Groundwater levels;
- Purification plants;
- Metallurgical works;
- Soil quality.
Social factors are critical and decisive in determining the value of real estate, among which are:
- Classification of population by age groups depending on the percentage of birth and death;
- Prestige neighbourhood or area where real estate is assessed. When for some reason, cities, communities, buildings are becoming popular, prestigious naturally housing price increases although characteristics or construction costs or recovery of land as objects are similar to that of other regions;
- The difference between social classes or between people with different levels of education;
- Family size.
The second category of general factors influencing the real estate value is internal factors, of which the most important feature and considerable influence, location.
A decisive impact on the commercial property has the location. This element must be examined in detail from the assessor.
The building cost largely depends on their business qualities, which in many cases depend on his location.
After the results of this research we can answer the following questions:
- How attractive is the place of the building;
- What kind of street is the one on which the property is located;
- What is the demographic composition of the population, who lives and works on this road;
- How is the property located on the street;
- Are there near the building, attractive places for a large number of people such as train stations, large supermarkets.
Besides the location, the value of a building is influenced by many other factors such as:
- Total area of the building and effective decision;
- Underground existence;
- Frontal type of commercial real estate;
- Existence yard and access to loading and unloading work from the back of the building;
- Sanitary-ecological condition of the rooms.
The physical characteristics of the building are a big influence as well, and they are expressed through the built area, age, number of levels, a particular feature of the constructive elements and technical equipment, public networks.
Which are the things that determine the devaluation of the property?
A crucial aspect is the position which preserves the best from the markets value and its quality.
The development potential of the area where the property is located, state of the housing market, the economy are factors that may influence the market value of a property
Then, some compelling aspects are the physical characteristics: the condition of the building, the materials used in its construction and quality finishes.
Tips to keep a high value on the market for your property
Building starts to depreciate from the first day of life.
As we mentioned, the market value of a property depends on external factors as well.
If these market factors compensate for depreciation, the property value will increase over time, especially for buildings in the first part of their economic life.
For a household to lose as little of value, it is essential that owners properly maintain the property, to make in time repairs to items associated with the shorter lifespan, even the capital ones, after a period.
As we do to a car periodically an overhaul and repair or replace what is damaged, the more such action is necessary to a building.
Maintenance and repairs must be performed regularly and coordinated by specialists.
Depending on the timing requirements, the building will be modernised, thereby reducing maintenance costs.
One study sets forth the mechanism of real estate rating fast and transparent which takes into account three criteria – building location, facilities and services in the area and the house itself – to determine a fair price, calculated easily by the customer and developer alike.
Location. Location. Location.
The site of the property could increase by 20-30% the price.
Thus, the properties which are closer to schools, kindergartens, public transportation, hospitals, pharmacies, grocery stores, restaurants, banks, parks, places of entertainment, will always be more expensive than similar apartments in areas that do not provide these facilities.
The reputation of the area is another factor that can increase or contrary decrease the housing prices.
Neighborhood recognised as a good one will be more expensive than a neighbourhood recognised as a bad one, even if the other criteria are identical.