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June 22, 2017
Content: Why it is important to have professional guidance to determine the fair price of your apartment for sale in Medellín; the most common mistakes owners make when incorrectly appraising their property; and the types of appraisals.
The first step is to understand what an appraisal is.
An appraisal is a study conducted to determine the market value of a property based on current market conditions.
Determining a property’s price can be a complex task, especially when proper professional advice is lacking and owners rely solely on assumptions. Approximately 35% of properties on the market are incorrectly priced due to a lack of knowledge. Many owners attempt to set a price on their own without considering that the real estate market is highly complex. Making a poor pricing decision can create a negative impression during future transactions.
If a property is listed above market value, it will naturally be unattractive to buyers, resulting in few or no offers and a much longer selling period than average. In most cases, the issue is only resolved when the owner decides to correct the price.
Knowing the true and fair value of a property is important for both sellers and buyers. Therefore, it is essential to have the right real estate guidance to accurately define a fair price.
KEY FACTORS THAT INFLUENCE A PROPERTY’S VALUE
Several factors play a key role in determining the true value of a property, including:
Size
Location
Legal title
Property age
Amenities
Common areas
Overall condition
Comparison with similar properties
COMMON PRICING MISTAKES MADE BY PROPERTY OWNERS
Below are some of the most common mistakes owners make when pricing an apartment for sale in Medellín:
Mistakes
Including parking spaces in the price per square meter: Many people compare properties located in the same area or with similar characteristics but fail to separate the value of parking spaces and storage rooms. A property with three parking spaces should never be compared to one with only one. When calculating the price per square meter, parking spaces and storage units should always be excluded.
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Not considering the age of the property: Many owners compare older properties with new developments nearby that may offer similar amenities. However, regardless of other features, the age of the property is one of the most important factors in determining its price.
Comparing properties in different neighborhoods: A well-finished apartment for sale in Laureles should not be compared to one in El Poblado, even if they share similar characteristics. Location has a significant impact on price.
Ignoring monthly administration (HOA) fees: Some properties have high administration fees with few amenities, while others have lower fees with more amenities. This directly affects a property’s perceived value and must be considered when setting the price.
Understanding which properties should be used as comparisons requires deep market knowledge and experience. For this reason, seeking professional advice is essential.
PROPERTY APPRAISAL METHODS
There are currently four main methods used to appraise a property:
This method determines a property’s market value by analyzing similar properties that are currently listed or recently sold, considering characteristics, location, and condition. This method is only applicable to properties subject to horizontal property regulations (condominiums).
This method establishes the market value of a property based on the rental income it generates.
This method determines the property’s market value by calculating the current value of the land plus the present value of the construction, then applying depreciation based on the property’s age and condition, using the Fitto and Corvini table.
This method is used exclusively to determine the market value of a lot. It considers the highest and best use of the land based on the municipality’s zoning plan (POT). A feasibility study is conducted, and both direct and indirect project costs are deducted.
CONCLUSION
It is essential to correctly identify the type of property being appraised in order to choose the appropriate appraisal method and obtain an accurate market value.
Incorrect pricing decisions are a recurring issue in the real estate market. If you have an apartment for sale in Medellín, Alberto Álvarez offers expert professional guidance and full support throughout the entire valuation process.
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