What is the market value of real estate and its definition according to international valuation standards
Introduction
Investing in real estate is one of the most important investments an individual or organization can make. In order for an investor to make a sound investment decision. He must have a good understanding of the concept of the market value of a property.
Defining the market value of real estate
The market value of a property is the price at which the property can be sold in current market conditions. Under the assumption that the buyer and seller are willing, informed, and not compelled. They make a fair trade.
The definition of market value according to international valuation standards
According to international standards of evaluation. the market value is:
“The amount for which a property can be sold in current market conditions. Under the assumption that the buyer and seller are willing, informed, and not compelled. They make a fair deal.”
Factors that determine the market value of real estate
The market value of a property depends on a number of factors. From them:
- Location of the property: The location of a property plays an important role in determining its market value. The better the location. The market value of the property has increased.
- Area: The area of the property plays an important role in determining its market value. The larger the area. The market value of the property has increased.
- Architectural condition: The architectural condition of a property plays an important role in determining its market value. As long as the property is in good condition. The market value of the property has increased.
- Utilities: The facilities available in a property play an important role in determining its market value. The more facilities The market value of the property has increased.
- Economic factors: Economic factors such as interest rates and interest rates. plays an important role in determining the market value of a property.
Real estate valuation methods
There are many different ways to value a property. The main ones are:
- Comparison method: This method relies on comparing the property to be valued with similar properties that have been sold or rented in the market.
- Cost method: This method is based on estimating the cost of constructing or replacing the property.
- Income method: This method is based on estimating the expected future net cash flows from the property.
The importance of the market value of real estate
The market value of real estate plays an important role in many areas. From them:
- Real estate appraisal: Uses market value as one of the primary criteria for real estate valuation.
- Real estate financing: Market value is used as one of the primary criteria for obtaining real estate financing.
- Real estate taxes: Market value is used as the basis for property taxes.
Tips for determining the market value of real estate
Individuals or organizations can take advantage of the following tips to determine the market value of a property:
- Hiring a certified real estate appraiser: Real estate appraisers accredited by the Saudi Board of Certified Real Estate Appraisers can help you accurately determine the market value of the property.
- Gather the necessary information: Gather the necessary information about the property. Such as its location, size, architectural condition, and available facilities.
- Compare the property with similar properties: The property to be appraised should be compared with similar properties that have been sold or rented in the market.
Conclusion
The market value of a property plays an important role in many areas. In order for individuals or organizations to make a sound investment decision. They should understand it well.
