When it comes to property value, we’ve all heard that the three most important things to look for when choosing a property are location, location, and location. Or so they say.

But is it really true? What other factors are there that contribute the value of a property?

We’re so glad you asked. Here are The Property Partnership’s top ten factors* affecting property value:

1. Market Trends

First of all, what’s happening in the market? This applies both locally and globally. Since 2008, investors have been more cautious in general, and property has taken a particularly hard knock. it’s no longer the “sure thing” it once was, and it’s important to bear that in mind when making a decision. A property valuer who knows what they are doing will look at similar properties in the same area and other similar areas to determine what is likely to happen with the value of the property in question, before looking specifically at the property itself.

2. Similar properties

Along the same lines as the previous item, it’s important to consider the specific market and properties being sold there. What features do they have that would make them more or less competitive than the property in question? How long were they on the market for before they sold? How close did the seller come to achieving his price? All these factors and more help assessors make accurate valuations of a property.

3. Number of properties on the market

The more properties are available for sale, the lower the average property price. It’s that old supply-and-demand chestnut. Property sales bring an added dimension to this, though, in that a glut of properties in a particular area could sound alarm bells for potential investors. Possibly there are economic factors influencing the rush: people can no longer afford their properties and are forced to move. But the more sinister possibility is that there’s something wrong with the area, such as crime or noxious pollution, and it’s forcing current owners out. Don’t forget, too, that when there is a lot of stock to choose from in any market, even property, the lower-priced properties tend to move faster.

4. Competition

Related to the points above and the one below, the property value must reflect the competing current market. In other words, the value must be reasonable for the area and features, and it must be reflected in the price.

5. Pricing

An obvious one, yet it still bears mentioning: if the property is priced right, it will sell faster. This is where the services of an expert valuer are crucial. An objective assessment will help you ensure that your property is accurately valued.

6. Asking Prices vs Sales Prices

This point relates directly to point five. The real key to an accurate property valuation is the question, “Is your pricing realistic?” Are you chasing people away by starting too high … or diminishing the perceived value of the property by starting too low? People expect to negotiate, but not too much. An expert property valuer can help ensure you get this crucial step right.

7. Presentation

First impressions count. A property should look as appealing as possible to potential investors. Of course, a savvy investor knows what to look for, and won’t be fooled by a pretty façade. Whether you’re selling, and trying to spruce the place up a bit first, or buying, and keen to get the best possible deal, presentation is just as important. Make sure the property is in tip top condition.

8. Renovation Potential

On the other hand, perhaps you’re an investor (or selling to an investor) with a specific goal in mind  – to create a space with your unique stamp on it. If this is the case, it might be more important how easy the property is to upgrade or overhaul. Then again, a property needing a lot of work could put off potential investors. It pays to know your market. Engaging the services of people who do – both realtors and valuers – is key to a successful, stress-free transaction.

9. Unusual Features

A property with something interesting or rare to add can be a wonderful find – or it can be a little bit weird and off-putting. A savvy property valuations expert will know the difference, and be able to assess which features will attract investors, and which won’t. They can then price the property accordingly.

10. Location Location Location

You knew we’d get there eventually, didn’t you? Where a property is located makes a difference. Easy access to important routes counts. For residential property, buyers or renters may be highly motivated by a property’s proximity to schools or shops. Businesses will be more interested in the locations accessibility, and how close it is to their suppliers and customers (or competition!). The area also matters. In SA, crime is a big factor in commercial property valuation. Staff and clients need to be safe on site, and business owners need peace of mind that their stock and tools won’t be pilfered the minute they leave the premises.

In a Nutshell: Know Your Market

This list is not comprehensive, nor is it in any particular order. The fact is that all these factors and more can affect both a property’s value, and a buyer’s decision. The key is to know which factors are relevant to your situation – or hire the experts who do.

The Property Partnership provide free quotations and comprehensive, accurate valuations on commercial and industrial property, as well as plant and machinery. Call us on 0860 999 440 or email office@tpp.co.za to get a valuation that is relevant to your needs.