According to the Royal Institution of Chartered Surveyors (RICS), Market Value is defined as:

“The estimated amount for which an asset or liability should. exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction after proper marketing where the parties had each acted knowledgeably, prudently and without compulsion.”

Sellers will always want to sell at the highest possible price, whilst Buyers will want to buy at the lowest price – determining Market Value will provide a platform for both parties to negotiate the transaction.

The home's location has the most significant impact on the valuation. For example, the value will be negatively impacted if the house is in an undesirable neighbourhood. Though you can't change the property's location, you can do something about other factors that could lower the home valuation/appraisal. For instance, you can spruce up your curb appeal, make sure the house is clean and tidy, and take care of any light repairs and routine maintenance items – by doing this, you maximise the value of your property.

Documents

Getting a copy of the deed/lot plan and site description is essential. This helps the valuer determine the size of the lot and if there are any restrictions on the property.

Clean

Make sure your property is tidy and well presented.

Paint

A fresh coat of paint can clean up the look of your home. Ensure the painting is done to a high standard.

Maintenance

Many of us usually have minor home improvements that we have never done. Now is the time to fix these and ensure that the overall home inspection is positive.

Benefits

It is also essential to let your property valuer know all the benefits and features of your home that they may not be aware of. For example, if you have just refurbished the kitchen, upgraded an appliance, or added solar panels that will stay with the sale, make sure you mention these.

Documents

Leases: Leases of tenants. This helps the level of income which assists in determining the value of a commercial property.

Maintenance

Ensuring that common areas are in good condition, internal and exterior lighting is working, elevators are working and recently inspected are among the things a landlord/property manager can do to prepare for a valuation.

Benefits

It is also important to let your property valuer know of all the benefits and features they may not be aware of. For example, if a new fire alarm system, HVAC system, or solar panels were installed, or other amenities should be mentioned to the valuer.

We mentioned location tends to have the most significant effect on value. However, other factors have an impact on value.

Neighbourhood Comparables

Analysing market transactions of similar properties in similar locations (comparables) helps determine value as they reflect the price point at which the market is willing to purchase similar properties. A challenge is that no two comps are the same, so a valuer/appraiser must adjust for critical differences.

Home size and usable space

Size is important since a larger home can positively impact its valuation.

Condition

Typically, newer homes appraise at a higher value. Critical parts of the house, like plumbing, electrical, the roof, and appliances, are newer and therefore less likely to break down, which can generate savings for a buyer.

Market Conditions

Even if your home is in excellent condition, in the best location, with premium upgrades, the number of other properties for sale in your area and the number of buyers in the market can impact your home value. If there are a lot of buyers competing for fewer homes, it’s a seller’s market. Conversely, a market with few buyers but many homes on the market is referred to as a buyer’s market.

Upgrades and Updates

Updates and upgrades can add value to your home, especially in older homes that may have outdated features. However, not all home improvement projects are created equally, and location can influence this. Some projects like adding a pool or wood/quality tile floors tend to have more considerable increases for more expensive homes, while projects like a kitchen remodel or adding a full bathroom tend to have a more considerable increase for less expensive homes.

Macro-Economic Indicators

The economy often impacts a person’s ability to buy or sell a property so that the housing market can struggle in slow economic conditions. For example, if employment or wage growth slows, fewer people might be able to afford a home, or there may also be less opportunity to relocate for new opportunities.

Interest rates

While in Bermuda, there is not much volatility and fluctuation in interest rates, it still can influence the market when there are increases. As interest rates increase and higher down payments are required, fewer people may be able to afford homes, decreasing market demand and impacting how much you can sell your home for.