HOW DO YOU EVALUATE THE RESALE POTENTIAL OF A PROPERTY?
Technically speaking, a property’s value is defined as “the present worth of future benefits arising from the ownership of the property.”
Valuing real estate can be tricky, not only because each property varies in location, lot size, square footage, and features, but also because the benefits of real property are generally realised over a longer period of time. Therefore, an estimate of a property’s present and future value must take economic, social, and environmental conditions and trends into account.
When evaluating a property’s resale potential, it’s essential to reference four elements of value:
Consider local employment rates, job growth, and the overall economic health of the area.
Assess whether the property characteristics will stand the test of time. Also, consider if there are renovation opportunities, as homes that can be easily updated or expanded may offer better resale potential.
Determine if the property has any unique features. How will local zoning laws affect future development of the immediate area? Is there planned infrastructure that may enhance or detract from the property’s desirability?
Because real estate is immobile, its rights and interests must be perceived as valuable. The more encumbrances or restrictions against a property, the less its perceived value (use restrictions, environmental protections…).
Property valuation is an art, not a science! At the end of the day, there is no way to guarantee a property’s resale value as there are many factors at play. However, your Realtor should be able to give you a well-informed estimate based on market trends, neighbourhood dynamics, and specific property features so that you can make strategic decisions that align with your long-term financial goals.
Questions? Reach out for a chat!
Claire has a keen interest in investment properties and looks forward to continuing to help her clients build their real estate investment portfolios.