The asking price is one of the most relevant factors when selling a property. An overpriced property, specially in our actual world where we have all the information in our hands via internet, will never sell and will only serve to sell our competitors properties and a underpriced property will reduce the net to be obtained from a sell. Therefore, it is crucial to have a competitive price when selling an property to maximize our investment. Valuating a property is not an easy task as not having some knowledge of the market may affect the result of it but, in any case, there are some steps that will guide to a more accurate value. These valuations are done using comparable properties and are called Comparative Market Analysis Reports. The steps will be the following:
1.– Obtain accurate information of the property. For an apartment, that includes interior built square meters, square meters of terraces, orientation and views, quality specifications, access, the inclusion of garage and storage, the facilities of the complex and status and presentation of it. For villas, also the square meters of the plot and the design and maintenance of garden and pool.
2.– Look for comparable properties with similar characteristics as the one being studied. The best comparables you can use are “sold” comparables but that information is not public in Spain so, unless you know an expert agent in a specific area that is selling mostly in that location and knows those sold prices, you have to use “for sale” comparables. A Comparative Market Analysis with “for sale” comparables will not be the most accurate one but will give the asking price to be at the same level of the competition. If it is a market with an excess of properties for sale, the asking price should be lower than the one obtained this way so you can compete with an advantage on price over the other properties to be the first one to sell. If it is a market with a shortage of properties, being at the same level of the competition is fine because all these properties should sell sooner or later.
3.– Calculate the price per square meter of the comparables. Once the properties most similar to the one being studied have been selected, the next step is to calculate the price per square meter of each one taking into account the size of the terrace and the interior built area for apartments. If the property is a villa, the price to buy the plot where the villa is built on in that location should be discounted prior to calculate the price per square meter. The average of all these prices per square meter of all the properties will give the average price of the comparables. If “sold” properties are used, the resulting price will be much more accurate.
4.– Estimate the selling price of the property. When talking about apartments, that price per square meter calculated previously applied to the size of the property being studied will give the estimated value of the property. In the case of villas, the price of the plot has to be added to the estimated value of the construction to get the value of the villa.