How can you adjust your property valuation methods to account for changes in the real estate market?

The one thing that sticks in my mind. Over the 45+ years of me doing this, is that if we forget our past, we run the risk of repeating it in the future. The elements of comparison, specifically motivation became very clear over the last few years, due to COVID-19. However, if I look back, the list to sale price ratios and how out of wack they became, can be put down to motivation, some call it fear, some call it greed. This can be analyzed, quantified and explained. Acknowledging that the correction that has taken place over the 2021-2022 market, was not a crash. It was imposed on us. We will see this as a historical fact as we go forward. Hire a Professional Appraiser from the Appraisal Institute of Canada ensures a greater understanding.

In my experience, looking at the location, the condition, and the value of a property to lease all come into play. Making sure I highlight all the positive details of the property with terrific professional, photography and meeting prospective tenants at the property help immensely.

The comparable property valuation method is most ideal as it compares what has been sold with what is being valued. This is most suitable for houses and pieces of land. However for commercial properties, the income approach is more ideal and uses comparable rentals and capitalisation rates derived from recent sales

To adjust property valuation methods for changes in the real estate market, you need to consider these factors: Regular market analysis, Comparative market analysis, Economic factors, property specific factors and Professional appraisal.

Using multiple methods boosts how accurate and reliable your property valuation is. It's key for making smart decisions in real estate deals, investments, and managing properties.

Ensuring the most accurate and relevant data is absolutely crucial in assessing the value of a property and/or rental unit. Drilling your data down to your specific sub-market and understanding your specific sub-market characteristics is what will often set you apart from a competitor. Having the ability to provide your team with real-time, relevant data is a key component to tapping into their maximum potential. With knowledge comes power and the right data empowers people to execute with conviction. Lastly, the data you are acquiring needs to be consistent. Adding and removing competitors or categorically removing data sets will ultimately lead to an inability to confidently make decisions quickly which is crucial in our arena.

To be successful in selling a home immediately for top value or winning that sales contract for my buyers, data is essential. Current data is the foremost objective to obtain but sometimes you need to know how to interpret data (ie home sales) that is older as well. An experience agent must know how to do this in order for their clients to be successful.

The danger of external factors is that they are external,you may have no control over them. Most of these are God acts and no human may control them. They have to happen when and where they are made to happen. Thus I encourage people to have a form of belief system. You have to be a believer in the things of God. That will make you understand the happenings that you have no choice of or can control. When they happen faith comforts you.

External factors could prove beneficial to forecast trends, although in my opinion you should be cautious around adding optimism to valuations based on external factors unless this can be demonstrated alongside a bona fide real life event. For example increasing rent/sale prices on the basis of an external factor is dangerous unless you have seen a positive run on sales pace alongside this, although as the market correction we are currently witnessing demonstrates we should always readjust swiftly. The period of COVID also taught us we can’t second guess market trends and forecasts are just educated people’s best guess. A persons disposition to risk will ultimately be the deciding factor in applying a strategy to commentary & assumption’s.

As a professional, providing clients with top service and advice is on the forefront of my business. When advising a client on a home purchase or sale, I provide the most accurate data but sometimes external factors can get involved. The biggest external factors for the housing market in my immediate area are interest rates, inflation and consumer confidence. Interest rates can directly impact the purchasing power of a buyer looking for their next home. Inflation has similar influence on purchasing power due to monthly costs rising in our lives, equates to less affordability for a buyer's future loan to purchase that home. The consumer's confidence in the strength or weakness of the market is also crucial when determining value.

The use of technology can be helpful when determining a property's value but should not be the main method or tool. Raw data being evaluated by a professional that knows the process is best for obtaining an accurate value.

Consultar con inmobiliarias de la zona que conozcan la fluctuación del mercado inmobiliario, fijarse en tasaciones recientes de pisos similares, utilizar la tecnología y usar testigos.

It is essential to avoid confirmation bias and consequently seeking the opinion of a dedicated professional is essential. Given that many nuances in real estate can be polarised around short geographical changes, finding a professional with local ‘boots on the ground’ knowledge and demonstrate-able experience is very valuable and should be considered just as important as high level data driven solutions. Averages are simply that, if you have the corner building that is five floors higher than the rest with ocean views, the average counts for very little… where as the person on the ground will likely understand the premium for the view, corner aspect and will have supply and demand commentary around the same.

A professionals advice in determining the value of one's property is the best action to take to avoid any miscalculation or mistake. It is a good idea to do your own research on your property's value but an expert who does these valuations for a living will be able to interpret the data and market conditions more accurately.

Cada zona es un mundo. Para conocer el mercado a fondo, con maximo nivel de detalle especializarse en zonas concretas es fundamental. Tener la percepcion de la calle, saber qué pasa ahí, todo esto te da muchas pistas. Conocer qué inmuebles se han vendido, los precios y que perfil de persona esta comprando. Con esto dominado es facil dar valoraciones precisas.

Consider the demand and supply dynamics in the local real estate market. Changes in market demand or the availability of properties can influence property values.

In attempting to identify the value of an asset(s), it is useful to identify what the most likely use will be in the short and medium term in addition to understanding why the valuation is being requested in the first place. For example if the asset is being valued for the purpose of disposal then, whilst the owner will likely seek the use which provides maximum value on paper, that doesn’t necessarily mean the ‘market value’ will reach the same level given that prospective buyers will value the asset on the merits of the intended use for their acquisition. It is always important to understand that if a disposal will require finance - most do, then the lender will want to ensure that asset is suitable security against the loan.