When purchasing a residential property, most people aim for properties that fit the budget and have the most features. While the price is the number one deciding factor for most people, it is surprising how little thought they put into why the things (e.g. price of a property) are the way they are. But again why should people care about this issue? – In real estate, the more you know about the methodology of things, the better. If you know all the deciding factors of a property’s price, you will never end up losing money regardless of you being a buyer or a seller. You will know when to hike the price and when to keep it low. Having that said, here are the top 5 deciding factors of a property’s price.
Location
Depending on the context, location can mean different things. For example, it can mean the location of your property in an area or it can mean the location of your apartment in a building. Whichever it may be, location is one of the most crucial deciding factors of a property’s price. For instance, if we compare the price of apartments of a similar size and settings in two of the most popular areas of Dhaka – Gulshan and Mirpur – you will see a drastic difference. The reason? Location. Gulshan is way more developed than Mirpur both in terms of lifestyle and infrastructure. People living in Gulshan have access to better facilities and can enjoy a lifestyle that people living in other areas just can not.
Now, what if your property is located on the ground floor or at the top of a building? The price may vary in such cases as well. To sum it all up, when appraisers determine how much value to assign based on the location, they look for infrastructure and important establishments.
Size and usable space
Since the value of a home is roughly estimated in price per square foot, a bigger home will impact its valuation. For example, a 1450 sq.ft. house with a price per square foot of BDT 3,172 will cost BDT 46,00,000 whereas a 2200 sq.ft. house with the same price per square foot will cost BDT 69,78,400.
Along with the size, another thing to consider is usable space. That is to say, the more beds and baths your home offers, the more it is worth generally. Although these trends vary from locality to locality, there is no denying the fact that size is one of the most important deciding factors of a property’s price.
Construction materials
The construction material that is used to construct the building can impact the valuation of the property. From bricks and mortar to rocks and granite, people use all sorts of materials to construct their houses, some materials being much more expensive than others. For example, a house with a reinforced concrete structure should be more expensive than a house with a wooden structure. There are different types of flooring at different price points. Even doors and windows can dramatically impact the value of your property. Like these, there are lots and lots of factors that can cause the value of a house to increase.
Design and functionality
The way a house is designed can determine a lot of things including the price of the property. A building or a house with modern architectural design can cause the demand to go up. Similarly, the functionality of a house can have a huge impact on the price as well. For instance, a fully furnished house with every functionality, from an HVAC (heating, ventilation and air conditioning) system to all kinds of smart home features will cost more than a house without them. So when it comes to deciding factors of a property’s price, design and functionality play a major role.
Age and condition
It is typical for a home that is relatively new to appraise high. The reason behind this is very straightforward. If the critical parts of the house such as plumbing, electrical systems and equipment, the roof, and other appliances are newer, it is less likely to break down and can help generate savings for a prospective buyer. For example, the roof of a newer home tends to last longer than that of an older home which may need a replacement in just a few years. That is why a proper home inspection is really very important before making the purchase.
These are the tangible factors that positively impact the valuation of a residential property. However, intangible factors such as the local market, supply and demand, interest rates, and demographics can also be important factors of a property’s price.
We hope you gained some new insights into the real estate market and understand why the market functions the way it does. And as always, leave us a comment down below. Your opinion is very important to us.
