In the real estate market, assessed valuation is of the utmost importance. It refers to the monetary worth of a property which determines the property tax applicable on it.
Municipal Corporation is responsible for the assessment as every tax region has different procedures for assessed value calculation. Following are the factors which are accountable for the assessed valuation of a real estate property:
This is one of the most primary factors in assessing a property’s value. The locality and connectivity of the property to the rest of the state is extremely important. For example, a family looking to buy a house will favor a property which has an educational institution for kids in its vicinity, fun places for weekend activities and transportation connectivity to their workplace.
- Internal and External factors
Internal factors include intricate details about the place. The number of rooms, area covered, furnishing status, etc, are a few parameters included in the same. On the other hand, availability of basic amenities like water supply and electricity, newly built or old property, design structure fall under external factors. A combination of these two plays a pivotal role in determining the property’s value.
In layman terms, this refers to market study. It is calculated on the number of vacant inventories versus the number of buyers, both of the targeted region. Realty value is also dependent on the cost of a similar property sold in the neighboring area.
There are 3 major approaches employed to assess the value of a property:
- Cost Approach
In the process of determining the value of a property, depreciation of assets combined with land’s market value is one of the most prominent factors. This is the most common approach.
- Market Approach
This approach is purely comparison based. The rate of neighborhood’s sold properties is used to estimate the value of agricultural and residential properties.
- Income Approach
It is defined as an approach which uses operational factors like maintenance cost to assess the value of a property. This is mostly used in the case of rental properties.
Real estate is a constantly fluctuating market. Every factor has its own role to play while assessing the value of a property. Any development in the region or even the smallest change has the ability to swap a few digits in the property’s rate. Market experts strongly suggest that every buyer must study the market constantly before taking a firm decision associated with any property.