What is the fair price of a property? We’ll tell you!

We often receive questions from customers about the right time to buy an apartment: now or wait a while longer until the prices “normalize”? Following discussions with our clients, we decided to address a topic that is on everyone’s mind, namely: What is the fair price of a property?

Most of the time, the sellers subjectively choose the sale price due to the sentimental investment, and this tends to be much higher than the market price – an aspect that makes the property difficult to sell. At the other end of the spectrum is the situation where the selling price is well below the market price, which makes potential buyers much more reluctant.

A fair price gives the buyer the security of a fair investment, and the seller trades the property in a much shorter time. The value assigned to a property differs depending on the purpose for which it is valued, giving it market value, investment value, assigned value, just value or special value.

The assigned value is that value established by the local financial authorities for a plot of land and for the existing construction on it, an estimate for the purpose of taxing the property, while the estimated value (or market value) is the value provided by an expert appraiser for a property after a thorough analysis of the property.

The estimated value or market value of a property on the real estate market can be estimated using three methods:

• Estimate from market perspective: this method analyzes existing information by comparing the prices of properties with characteristics similar to the property you want to buy or sell. For this purpose, aspects will be analyzed such as: the area where the property is located, the usable area, the compartmentalization, the degree of finishing, the floor, the annexes, etc.

• Estimate from income perspective. This method analyzes the ability of a property to generate income compared to its costs: utility costs, tax, repairs.

• Estimation from cost perspective. In the case of this estimate method, the value of the property is analyzed by deducting the accumulated depreciation from the cost of the new construction. To this result the estimated value of the land is added.
It is important to specify that there is no concrete value that can be assigned to a property. A price range is estimated, in which that property falls. Here are the aspects to keep in mind when estimating the correct price of a property.

- Date of construction of the building (age of the building)
- The structural system of the building (construction on concrete frames – much safer in case of earthquake, or structure on load-bearing brick frame)
- The size (usable area) and the destination for which the property was designed (home, office space, etc.)
- The interior and exterior finishing system of the building
- System of functional installations
- Building annexes and type of fencing
- Electrical and sanitary installations (make, current condition, warranty, etc.)
- Thermal insulation level
- Existence of smoke detectors
- The type of heating of the property and the energy certificate of the building
- The humidity level in the house (a high humidity level can favor the appearance of dampness and mold)
- The degree of brightness
- Materials used for arrangement
- Location of the property (points of interest in the area: existence of public transport, parks and green areas, schools, medical offices, etc.)
- The degree of pollution in the area
- Noise level
- Existence of annexes
- Additional features (eg. Air conditioning)
- Guaranteed parking space or garage
- Floor (ground floor and top floor may have a lower selling price)
- Positioning (the apartment on the corner of the building may have a lower price than one positioned in the middle)
- “Red dot” – the degree of seismic risk in which the property is included can lead to a decrease in the price of the property. On the website of the Ministry of Regional Development, Public Administration and European Funds you will find a list of technically certified buildings.

When is the ideal time to buy property?
Buying property in times of real estate recession: when stock prices fall, when interest rates rise, when there is a high unemployment rate, when consumer confidence falls. That is the ideal time to buy property. When prices are falling, the problem isn’t how much they will fall, but how much you can buy before prices go up again. Purchasing during a real estate recession and at a good price is as important as your ability to endure during such conditions.

You can consult our offer of properties on www.newconceptliving.ro and benefit from free real estate consulting from our agents specialized in this field. We are here for the safety of your investment!

Photo credit: shutterstock.ro
 

An article by Denisa Cristea