May 17th, 2010
When you wish to sell your property, it is normal for the broker to provide a realistic selling price which is based on original cost of land and property and current market rates for land and re-build costs. Furthermore in the case of property such as an apartment in a deveopment, price is based on original buying price and recent resales sold at a premium. It is a mistake to be greedy and ask for an unrealistic selling price as buyers have a great choice to choose from and will go elsewhere. Furthermore, when it does not sell and remains on the market for too long, then buyers become suspicious and avoid the property.
Brokers normally provide an asking price as part of the listing procedure and full written valuations are only usually provided for mortgages, bank loans or other financial purposes for a fee.
A Definition of Valuation:
“Valuation is a process of estimation of the most probable price which would be paid for a property under typical market conditions applying at the date of valuation…”
“The value of a property is the present value of all future benefits expected to be obtained from possession of the property.”
The ability to provide a professional and accurate Valuation Service relies on a combination of the professionalism of our valuation consultants and the quality of available market information.
The residential valuation model used is the Market Approach. Homes are valued based on what an average person would be willing to pay for a similar property. This data is derived by looking at current sales in Phuket. Every attempt is made to use sales that have the same characteristics as the property to be valued (subject property). These would include but are not limited to; area, number of bedrooms, baths etc., if it has a garage etc. If a subject property doesn’t have enough matching sales, adjustments are made to the sale properties most closely resembling that property to create a more equitable value. An example of this would be; if the sale property had a swimming pool and the subject didn’t the sale price would be adjusted to reflect not having a pool.
A sale at fair market value is by definition: The amount of money a well-informed buyer would pay and a well-informed seller would accept for property that has been on the open market for a reasonable amount of time, assuming neither buyer nor seller is acting under pressure. When a sale is deemed valid it can be used to help determine fair market value for other similar properties. The goal is to value all properties fairly and equally, while being as close to fair market value as possible.
The MARKET APPROACH involves comparison of a property with the characteristics of similar properties that have recently been sold. There is also the COST APPROACH which involves estimating the replacement cost of a structure, and adjusting that estimate to account for depreciation. Lastly, the INCOME APPROACH is an analysis of a property’s value based on its capacity to generate revenue for the owner. Due to the embryonic nature of the Phuket property market the “Market approach” is used.
If you require a full written valuation, please contact us.