25th October 2023

How to Calculate the Market Value of Property?

Buying or selling a house is an elaborate task that requires careful deliberations, as your decision can profoundly impact your fiscal future. An accurate assessment of the property's market value is one of the crucial aspects you must consider when you put up your asset for sale.

Market value is the rate at which you can sell your house under viable conditions. It excludes emergency scenarios like compulsion to sell off the property owing to financial crisis, inability to pay the maintenance charges, relocation, etc. This evaluation considers various elements, including your asset's location, current market dynamics, dimensions, state of repair, and comparisons with similar asset sales. Additionally, you can use tools to determine the online valuation of property.

This blog will highlight the different methods of determining the market value of assets in India.

Belt Method

For assessing the value of a substantial urban land parcel, the belting method proves highly effective. In this approach, the entire area is divided into three distinct belts, with the primary emphasis on the portion nearest the main road. Typically, the initial belt may extend approximately 10 feet, followed by the second belt, which can span up to 50 feet. The remaining section constitutes the third belt.

In this method, it is common practice to attribute 75% of the value of the first belt to the second belt and half of its value to the third belt. For example, if the first belt is appraised at Rs 10 lakhs, areas within 150 feet would be valued at Rs 7.50 lakhs, while areas beyond this range would hold a value of Rs 5 lakhs, the extent of which is determined by the size of the land.

Land and Building Method

Applicable for residential apartments, this evaluation method is based on the market price of your asset's location and the property tax standards followed in the area.

The appraisal evaluates the land and any structures present, considering their current condition and age. Additionally, the appraiser examines recent sales of a comparable property within your vicinity, utilising these sales data to establish the value of your home if it is listed.

Furthermore, the evaluation process may factor in potential buyer closing costs and could also weigh your property's replacement cost or depreciated value before reaching a final deal.

Comparative Property Valuation Method

Referred to as the sales comparison approach, this method involves evaluating the value of comparable properties in the vicinity to gauge the worth of the asset under assessment.

It is crucial to remember that plots in the same neighbourhood or housing development may exhibit price disparities based on orientation, dimensions, interior features and legal considerations. Nonetheless, this approach offers a ballpark estimate of the property's value.

Development Method

The quality of the surroundings and the growth prospects of the adjoining areas are some of the critical determinants of property valuation in India. The development method assesses the chances of an apartment or land parcel by considering the growth opportunities within the neighbouring vicinity.

This analysis aids in gauging the potential rise in the asset's market value, facilitating well-informed decisions for buyers and sellers alike.

Fair Market Value

According to the Indian Accounting Standard (AS) 113, the fair market value (FMV) is delineated as the price received for the sale of an asset or the payment made to transfer a liability in an organised transaction among involved parties as of the assessment date.

The specific factors affecting the FMV are buyers and sellers transacting under no pressure, and they are given a reasonable deadline to complete the process.

Brigade Valencia, an integrated township, is gaining immense traction among homebuyers because of its price appreciation prospects. Its strategic location near Electronic City and Hosur main road will bring residents in proximity to every possible civic and social amenities including reputed educational institutions, medical centers and thriving IT hubs.

Situated just minutes from the soon-to-arrive Bommasandra metro station and surrounded by a vibrant social infrastructure, this development offers an ideal choice for homebuyers seeking a serene lifestyle without compromising on city connectivity.

Conclusion

The market value of property assessment is a multifaceted process that draws upon various methods and considerations. It is essential in real estate transactions, whether buying, selling, refinancing or evaluating taxable property. The methods discussed offer valuable insights into the asset's worth.

However, it is important to remember that the most accurate valuation often results from a combination of these methods, depending on the property's unique characteristics and the specific context of the valuation. Additionally, local factors, market conditions and the experience of a certified appraiser all play significant roles in determining the property's market value.