By Ashwini Kumar Sharma
Finding out the right price of a property is important for both the buyer and the seller. Even within the same apartment block, the price of individual units vary depending on their location (floor and direction). As a seller, you cannot quote too high a price for fear of turning away the genuine buyers, while quoting a low price will lead to a loss.
The price to ask. This is something most individual sellers have problems with while deciding to put their property on sale. A suitable price will depend on a lot of factors, namely, physical appearance of the property, legality, transferability and marketability of the property documents, locality and economic and socio-cultural scenario of the locality.
The most common practice most real estate agents or individual home sellers follow while determining the price of a property is known as the ‘comparable property method’. In this, one takes into consideration the average sale price at which similar properties were sold in the last 3-6 months in the neighbourhood. For this, one can take the help of a local real estate agent and get an idea of the prevailing rates. Alternatively, one can scan real estate classified advertisements in newspapers and real estate magazines, or log on to property-specific portals such as www.99acres.com, www.makaan.com and www.magicbricks.com, and check indices, such as Liases Foras (www.ressex.com) or National Housing Bank (RESIDEX) on www.nhb.org.in).
Some banks and financial institutions also have a ready reckoner of property prices in certain localities.
Another method is to find out the prevailing circle rate in the area. This is the minimum rate for paying stamp duty on a plot, independent house, or flat in a particular area or a locality and is decided by the state revenue ministry from time to time. Typically, the sale price of a property in the market is higher than the circle rate.
However, despite your best efforts you may fail to figure out the property rate on your own. In that case, you can take the services of professional agencies or hire a government registered valuer for the valuation process. Typically, a valuer will charge you Rs2,000-5,000 for the evaluation. Fees may vary depending on the type of the property, its value, age and location.
Once you get a fair idea of the value of your property, you can make adjustments to account for specific defects or advantages your property has. You may consult a valuer to provide you with suggestions to increase the value of your property.
Enhancing the value. Before you decide to sell your property, consider its potential for redevelopment. You can enhance the value of a property through a little bit of improvement.
Try to redo the interiors to give the illusion of extra space; remove unnecessary furniture, if required. A clean and spacious house attracts more buyers. Fix up lights where needed. These small changes will not cost much, but may play a vital role in the sale.
In addition to such quick-fix touch-ups, you may have to go for bigger renovations to add value to the property or enhance the potential rentals. This way, you will be able to attract buyers who wish to buy a property only for the sake of investment and earn regular income through rentals. Expenses under this head will include those for repairs, replacements, beautification or extension, improving comfort, space, safety, style and preparedness, among others. Still, do keep in mind that some of these repairs are compulsory and cannot be avoided.
Once you are done with all these, it’s time to highlight the positives of your property to a potential buyer. Apprise the prospective buyer of the expenses you have borne in the redevelopment of the property. However, don’t quote a price in excess of 10 per cent to what you have actually calculated.
House for sale: Things to consider while evaluating the value of your property on sale
- Note down the merits and demerits of the property
- Figure out the selling price of similar properties in the last 3-6 months in the locality
- Take the help of real estate agents, classifieds, magazines and portals to know prevailing values
- Make adjustments in the value for specific defects or advantages of the property
- Look at the possibility of enhancing the value of the property through repairs and renovation
- Highlight the advantages of the property and the renovation costs
- Do not quote a price more than 10% higher than what you have calculated