Twin Pillars is a leading agency in the valuation, advisory, and consultancy industry that has been providing quality services to clients in Singapore and across the globe. We have extensive years of expertise on our belt in the valuation of businesses, plants and machinery, and real estate.
Over the years, we have established a reputation as one of the largest and most trusted real estate valuation firms in the state and we all credit it for our ability to provide our clients with the most accurate appraisal rates.
We are supported in our endeavours with our team of dedicated professionals and a full-fledged office in the famous Paya Lebar Square.
In this article, we introduce you to the basic concepts of real estate valuation and provide a brief information as to why besides business valuation in Singapore, estimating the value of real estate is more important than ever in a wide range of industries from financing, sales listing, taxation, property insurance, and investment analysis.
Why is Real Estate Valuation Important?
Estimating the value of real estate is crucial across many industries - it speaks particularly true for those who need to determine the asking price of a real estate property.
Basic Valuation Concepts Value
A property value is described as the present worth of future benefits brought about by the ownership. In contrast to many other goods that are quickly consumed, the benefits of real estate property are typically realised for a long period of time. Thus, when estimating a property value, economic and social trends, as well as governmental controls, environmental conditions and other regulations must be taken into consideration as they can greatly influence the four pillars of real estate value which are as follows:
Demand - the need for ownership backed by the financial means to meet the desire.
Utility - the ability to meet future owner’s specific needs and requirements.
Scarcity - the lack of properties to meet the demand.
Transferability - the ease of process of transferring ownership rights.
Value vs Cost and Price
Value doesn’t necessarily equate to the cost or price. In fact, cost pertains to actual expenditures which may include expenses on materials or on labour. Price, on the other hand, is the amount that you are paying for something.
Although cost and price can definitely affect value, it doesn’t, however, determine it. The sales price of a house might be $1 million, but the value could be way costlier or cheaper. For instance, if a potential owner finds serious damage or flaw in the property, the value of the house could be lower than the price.
Market Value
Market value or appraisal, on the other hand, is an estimate of the value of a particular property within a specific date. This information is used by businesses, investors, government agencies, mortgage companies and individuals during real estate transactions. By determining the market value, you get the most probable price that the property will be offered in the competitive market.
We hope this basic information will give you an idea about real estate valuation. Get in touch with us today to learn more!
