How to correctly evaluate the value of a property? If you are reading this article you have probably decided to sell your home (or office, warehouse or other) but you want to be sure you are evaluating your property correctly so as not to have unpleasant surprises.
After all, it would be rather embarrassing to find that you have sold your property for a misjudgment … Conversely, overestimating it will keep you on your back for a long time.
The ideal sale of a house is the one that makes the buyer and the seller equally satisfied, without leaving room for “if I had”: the first step in this direction is an accurate and objective evaluation.
In fact, correctly assessing the value of a property is the first step to successfully sell it. Very well, but how do you estimate a property in order to obtain the correct market value? We see it in the next paragraph entitled:
How to calculate the value of a property?
To calculate the value of a property or home, a mathematical formula is used that takes into account all the determining factors:
Market value = Commercial surface x Price per square meter x Merit coefficients
What is the commercial area?
The commercial area includes:
- the walkable surface;
- the external surfaces;
- the surfaces of relevance.
To calculate the commercial area, all the surfaces of the building are taken into consideration, to which some corrections are applied, however, reported on the website of the revenue agency.
What is the quotation per square meter?
The quotation per square meter is an estimate of the prices per square meter referable to properties in a specific area: it is the starting point for evaluating a property, together with the surface.
What are the coefficients of merit?
There are numerous aspects to take into consideration to reconstruct (because this is what it is) the commercial value of a home. We can roughly divide them into two orders of factors:
- external, concerning the location of the property on the territory;
- internal, concerning the characteristics of the real estate unit.
These factors affect the total value of the house, apartment, office, etc. with percentages called Coefficients of merit.
Coefficients of merit: external factors
Location of the property
The location of the property is therefore one of the most determining factors on the price and varies according to:
- city of reference (obviously!);
- distance from the center;
- proximity to services such as schools, hospitals, supermarkets, etc .;
- reachability by means of transport;
- tranquility and safety of the neighborhood.
You need to take these factors into account when evaluating your home. However, the price per square meter of the houses is fairly homogeneous in the reference areas, and it is not difficult to find the correct estimate.
Type of property
Just as you would never confuse an elephant, a giraffe and a helicopter with each other, so you certainly can’t mix up a villa, a studio flat and an attic. The type of property obviously affects the price of the property itself and is one of the starting points for its correct evaluation.
The distance from the ground is a very relevant factor for the evaluation. An apartment on the ground floor will usually be worth less than one located on the top floor of the same building because it is closer to sources of disturbance, more exposed to the hustle and bustle of the street and to the higher windows of the surrounding buildings.
The value of the apartment, therefore, increases progressively as the floor increases… as long as the building is equipped with a lift. Otherwise, the value will gradually decrease: no one likes to climb stairs, and this must be taken into account when evaluating the property.
For a ground floor apartment, the fact that there is a lift or not is not relevant, but the presence of a garden that limits its depreciation due to its proximity to the ground is relevant: the evaluation of a property located on the ground floor, the land also drops by -20%, which turns into -10% in the presence of a garden.
The valuation of a 1st-floor apartment must take into account a 10% decrease in value, with or without a lift.
On the 2nd floor, in the presence of a lift, the devaluation is limited to -3%, which becomes -15% if the only way to reach it is the stairs.
On the 3rd without a lift, the ax is lowered to -20%, which becomes 30% for the upper floors (but + 5% with a lift). The top floor benefits from an increase in value of up to 10% with a lift or a devaluation of -30% without.
Finally, a penthouse in a building with a lift could benefit from an increase in its value of up to 20%, without a lift it could see its valuation drop by up to 20%.
Bad news for those who have to sell a property located in the basement: the property valuation will easily drop by even 25%.
One of the characteristics that most influence the choice of a house to buy, and therefore its value, is its brightness.
The brightness of a property can increase its commercial value by up to 10%, as in the case of direct sunlight throughout the day; vice versa, in the opposite case, it can reduce it by up to 5%.
Exposure and view
Brightness is closely linked to the type, number and arrangement of the views – the so-called exposure. The greater the number of sides on which the house is exposed, the greater its brightness and therefore the value.
Consequently, the direction of the views is also very relevant: a house facing north only – where the sun usually does not shine – will still be worth less than one facing exclusively south, which enjoys a greater number of hours of light.
The reasoning is different for the type of view that one has from the overlooks. A broad panorama, perhaps over the sea or a beautiful park, is a view that opens the heart … and the wallet, positively affecting the valuation of the property by up to 10%. An external view, therefore facing the street, can increase the value by about 5% while an internal view can instead devalue it from 5% to 10%
Proximity/distance from sources of noise and disturbance
Everyone likes the idea of being able to feel comfortable in their own home. There will also be a reason why most disputes between neighbors arise because of various types of noise.
For this reason, the evaluation of property must necessarily take into account the possible proximity to sources of disturbance such as highways, railways or airports, but also sports fields or areas where the nightlife is particularly abundant and noisy.
Coefficients of merit: internal factors
The layout of the premises
An optimal layout of the premises inside the property to be evaluated will make the future sale easier. Conversely, a bad distribution of the premises could lower the value, because it could lead to a deep restructuring by the buyer.
The energy class is another important value, which can change the value of your home. But what exactly is the energy class of property? The energy class is a value that summarizes the energy efficiency of a property.
This is a value that in turn is obtained by taking into account further characteristics of the property itself, such as structure, location, materials, heating, type of fixtures, etc … The energy class is expressed on a scale ranging from A4 (maximum efficiency energy) to G (minimum energy efficiency).
Most of the properties currently present in Italy fall into the last category, because they are older buildings – new houses, on the other hand, usually have a higher energy class. A house with energy class G can consume 10 times more than one of category A4: this is why it affects the overall evaluation of the property.
From what has been said about the energy class, it is easy to understand how the type of heating is also a factor to consider when evaluating your property in view of the sale.
If we take centralized heating as a quality standard, we can observe that the presence of a meter (termovalvole) increases the value by about 2%; while autonomous heating can have a positive impact by increasing the initial evaluation by up to 5%. The total absence of heating can reduce the rating by 5%.
Year of construction
When it comes to real estate, new is not necessarily better than old: there are historic buildings that have intrinsic artistic value, and this – like it or not – can increase their market value. For its part, a new building usually has structural characteristics that make it better from the point of view of energy expenditure, safety, and accessibility.
Since architectural styles, materials, and construction techniques (and regulations) vary from one period to another quite homogeneously, the year of construction is an element that can suggest relevant information, to be taken into account in the evaluation of the house for sale.
The year of construction must obviously be related to the conditions of the property. Therefore, a 20 – 40-year-old building, if in excellent condition, can benefit from a 5% increase in the starting value; someone over 40 can see their value increase by as much as 10%. But in conditions of neglect, age turns into a disadvantage and depreciation of -10% or -15% in the case of buildings over 40 years old.
State of the property
From what has just been saying it can be deduced that, in order to correctly evaluate its value, you must pay sufficient attention to the state of the property because it affects the expenses that the buyer will have to incur to possibly bring it back to an optimal state.
- To be restored: -10%
- Refurbished: + 5%
- Finely restored: + 10%
- New: + 10%
Garden, balconies and terraces
The possibility of enjoying some fresh air directly from home is a quality increasingly appreciated by those who buy a property. For this reason, even the presence of balconies, gardens or terraces increases the value of the home.
How to evaluate a property without an agency?
To carry out the evaluation of a home, a real estate agency takes into account all these factors, integrating and mitigating them with experience data.
With a lot of patience (and a lot of free time), following these parameters and those reported on the official tables of the Revenue Agency, it is possible to make a fairly plausible evaluation even without a real estate agency. But so, the doubt of having left out some important information remains.
Can I have a property quotation online, for free and in a few minutes?
Yes of course, you can rely on a PropTech that relies on the most modern technologies to develop a property value assessor.
With the Inpoi property value calculator, you can make an online valuation of your property in just a few clicks: the valuer’s algorithm takes into account all the parameters listed above (plus other specific ones) by crossing in real-time all the data available on the real estate market, geolocated for unparalleled precision.