How to calculate the market value of a house in Kenya?
How to calculate the market value of a house in Kenya?
Whether you are a seller or a buyer, estimating the market value of a property is an activity that must take into account a multitude of factors including Real Estate Market Trends Kenya in 2019.
If you are considering selling your home or buying a new home, or buying a penthouse in kenya you obviously need to estimate its value. But how to calculate the market value of Real Estate property in Kenya? There are different methods available.
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In order to help you see clearly and avoid certain pitfalls, here are the elements to consider.
Estimate the value of your home
A simple and economical way to get an idea of the value of your home is to make comparisons with other homes in your area. Ask about the asking price for comparable properties.
Consider the following:
- The location: in town or in the countryside
- The type of dwelling: apartment, townhouse, house three or four facades
- The total area
- The number of rooms (completed): living room, separate kitchen, bath and shower rooms, bedrooms, veranda, etc.
- Age and condition of the house
- The degree of completion (standard materials or more luxurious finishes)
You can also calculate the price per square meter based on classified ads in your area. Divide the selling price by the total area. Multiply the price per square meter by the number of square meters of your home to get an idea of its value.
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The value used by municipalities for taxation purposes should be avoided when determining market value. It does not always reflect recent market fluctuations.
As a result, market values may exceed municipal assessments by several percentage points. No matter the situation, and although it can give a very general idea, it is best not to be so proud. Buying below or selling above the municipal assessment does not guarantee a good shot.
Methods of assessing market value
There is more than one way to estimate the market value of a property, but the “peer method” is the most common because of its simplicity. It consists of comparing the building with others with similar characteristics that have recently been sold in the same sector. It is normally suggested to rely on a sample of at least 4 comparables. Positive or negative adjustments are then applied based on the differences.
For example, if your comparable all have a double garage, while your property has only a single garage, it should be revised downward. A professional is obviously better equipped to make these adjustments, but you can still get a good idea of starting with this approach.
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In its simplest form, the replacement cost technique consists of calculating the land value and the replacement cost of the building and the land. Note that other factors influence the calculation. It is used especially when it is difficult to find comparables (inactive market, special purpose or non-standard building, new construction).
For rental properties, the income method roughly consists of applying a discount rate on net income.
In the two previous cases, unless you have a solid foundation in valuation and real estate finance, it is advisable to refer to a professional.
Given the importance of a real estate transaction, the cost of obtaining the expertise of a professional appraiser is usually worth it. For a property type bungalow or apartment, we will spend about 400 KSh to 600 KSh.
If the evaluation is below what you had hoped, perhaps it would be profitable to do some work.
When it comes to choosing a service provider, we advise you to do business with a member with good standing in the real estate business. Non-member professional evaluators can also provide excellent services.
Be aware, however, that unlike their certified colleagues, they are not governed by the strict Professional Code. Here we recommend Hayer One Ltd, if you are looking for the best property in the real estate sector Kenya.
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The primary duty of a home appraiser in Kenya is to give you the right time on the value of your property, taking into account various factors recognized by their profession.
Of course, some real estate brokers have knowledge of valuation and in many cases, correctly estimate the value of a given property. However, it is recommended to deal with an independent person who is subject to a professional order.
Your needs and wishes
Even with the help of an expert, it remains an estimate. Your personal situation must also affect your selling or buying price.
For example, if the supply is greater than the demand in the desired sector, take the time to shop and negotiate.
If you are considering selling your home or buying a new home, you obviously need to estimate its value. But how to calculate the value of a house? There are different methods available.
Also Read – Buying Real Estate Property in Nairobi, Kenya
Is the estimate realistic?
It is not easy to determine the exact value of a good. Supply and demand have a significant influence on home sales.
If you estimate the value of your home, then check whether the price you set seems realistic using common sense. Make comparisons with similar dwellings in the area.
Talk to our expert real estate developer in Kenya. Talk with neighbors, they often know the price of houses in the neighborhood.
Estimates can vary widely from expert to expert. An estimate is therefore only an indication. For more info regarding your real estate property valuation in Kenya, visit us and talk to our agent today.