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Property Value
| How
To Estimate The Market Value Of A Property |
Often people
fail to make a profit from property investment when they do not
understand the true market value of their chosen property, both
in terms of resale and rental income.
Investors hoping
to purchase a run-down home or off-plan development and sell it
on at profit when the work is complete; a practice known as flipping,
are often caught out by over-inflated prices or under-estimated
renovation costs.
On the other
hand, buy-to-let investors can be seduced by suggestions of high
rental values and then disappointed when these do not materialise.
Whether you're
planning to flip a property or buying-to-let, it is important to
ensure that you do not pay over the odds, as money saved on the
purchase price will lower your mortgage costs and increase your
profit margin.
Understanding
The Local Market
One of the
best ways to estimate the potential value of a property is to understand
the local market. Fortunately there are a number of tools to help
you do this:
Use The Internet
- The Land Registry (landregisteronline.gov.uk) now provide
information on all properties sold in England and Wales since 2000.
Through this you can access information on the property's value
when the registration took place. Remember this information will
not be up-to-date, but it may give you a broad idea of what the
current owner paid.
Browse Estate
Agent Listings - Using the internet and local papers, you can
soon get an idea of the market value for different types of property
in the area. It is also worth arranging a couple of viewings, allowing
you to make suitable comparisons when you have decided on a place
to purchase.
If you are planning
to buy-to-let, it is also worthwhile speaking to a few letting agents
to try and gauge the general rental prices that could be expected.
Again rental listings on the internet and in local papers will help
to verify the amounts tenants will be prepared to pay.
Seek Professional
Advice
Once you have
decided on a property and feel confident that it reflects the true
market value, it is advisable to carry out a full survey.
Although it
is a requirement for mortgage lenders to inspect the property, the
surveyor will not look at inaccessible parts (such as the roof,
floors and drains), unless there is reason to believe that there
may be a serious defect, in which case it is likely that a recommendation
for a more in-depth survey will be made.
The risk of
relying on this basic inspection is that the surveyor could miss
an important defect which will be expensive to repair. By having
a more in-depth survey, the surveyor will be able to identify such
defaults and advise on the potential cost of repair, allowing you
to negotiate a discount on the purchase price to cover this.
Take Your
Time
Unfortunately
there is no silver bullet approach to accurately valuing property
and one of the secrets to running a profitable property business
is investing time and money to ensure your buy your property at
the right price.
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