11 Ways of Valuing Your Property
You might be surprised to learn that there are at least 11 ways that a home’s value can be expressed for determining what price it should ultimately be listed at. Real estate agents only learn about three methods while getting licensed:
The Cost Approach
The Income Approach
The Sales Comparison Approach
The banks, especially, love everyone to use the Sales comparison approach. Before you choose a real estate agent to represent you on the sale of your property, make sure they are aware of all the different ways at your disposal to justify your asking price.
1. THE ASSESSED VALUE
This is what the tax-man thinks your property is worth. May have nothing to do with actual market value.
2. COST OR PURCHASE PRICE
This is what you paid for the property and is important because your capital gains will be the difference between your purchase price and the price you sell it for.
3. INSURANCE VALUE
Not usually taken into account for residential home purchases, the insurance value is nonetheless an important value to know, especially in areas that are at risk for flooding or seasonal fires.
4. BUYERS VALUATION
This is the maximum price a given buyer is willing to pay.
5. SALVAGE VALUE
This is what a property is worth if you sell it in pieces.
6. USE VALUE
Sometimes a property attains it’s highest value for a specialized purpose. An example would be a large restaurant or gas station franchise on the corner lot of a shopping mall. Another example would be a remote cabin in hunting territory.
7. PRICING VALUE
This is what the what a seller wants to make off the property and is totally subjective without factoring in the other home values. This method is not usually used by itself in a successful transaction, but almost always plays a small role in the offers that a seller ultimately selects.
8. REPLACEMENT VALUE
This is what it would cost to replace the property with a comparable one.
9. REPRODUCTION VALUE
Similar enough to Replacement Value, Reproduction value is what would cost to duplicate from scratch and build brand new.
10. SENTIMENTAL VALUE
Comes from the heart rather than the mind. Sentiments do have value. In fact, many things that people buy are priced on the supposed sentimental value, not the cost of goods to deliver it.
11. ASPIRATIONAL VALUE
Aspirational value is what the property represents to a prospective buyer in terms of an upgrade to their enjoyment of life.
12. MARKETABLE VALUE
Which finally brings us to “Market Value.” The most important way to value a home, or anything for that matter, is by what a buyer is willing to pay. What a ready, able and willing buyer is prepared to pay is informed by all these other ways to value a property.
We only determine marketable value after taking into account all the other kinds of value that are inherent to your property. Market value is achieved when a ready, willing, and able buyer purchases a home from a motivated but realistic seller. It is what I specialize in making happen.
Let us customize a marketing plan for you.
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