HOW TO EVALUATE PROPERTIES IN NIGERIA
The goal of every investment is to make profit. And most times, the best way to do this is by buying low and selling high – Just like the stock market. In real estate investment, One of the basic skills you need to know to be a successful investor is: how to evaluate properties. Let’s face it; if you cannot quickly evaluate a property for sale and determine if it is a good income property, you can’t be assured of success in your business.
This is the area newbie investors find very challenging and often end up buying properties way above market value. If you are a newbie real estate investor and you are reading this post, Congratulations! Because in this article, You Will discover how to properly evaluate properties in Nigeria. So pay close attention till the end.
But before that, Let’s look at a scenario where …
You have just been given a lead on a new property. You are told that if you want to make an offer, time is of the essence. In order not to lose the deal to another investor, You hop in your car and run to inspect the property as quickly as possible. While inspecting it, you take a few notes and figure you have seen enough. To your delight, your offer is accepted and you move to close in 10 days. Only after the closing do you notice cracks on the wall at the back of the building. Then it dawns on you – If only you just took your time and inspected the property correctly, you would have never gotten involved in a property you immediately regret.
This brings us to the question of what is Property Evaluation?
A property valuation is an assessment of the value of a property. This evaluation is usually based on location, condition, and multiple other factors. Haven known the definition of property evaluation, it’s time to find out…
HOW TO EVALUATE PROPERTIES IN NIGERIA
The first step in determining the value of a property is to find and calculate the market value for the property in question. Although technically, You could define “market value” as:
The price agreed between a willing seller and a willing buyer
This means that whenever you buy, you set the market value.
How To Assess Market Value
You can find out the market value of the property in question by inquiring about the price of properties in that environment that were sold in the past. For example, If an identical property across the road sold for £175,000 a few months ago(6 months), You can use that price to work out the value of the property that’s being sold now, the surveyor would take the £175,000 and:
- Increase or reduce it depending on the property’s condition
- Increase or reduce it depending on whether the property market, in general, has picked up or slowed down in the intervening months.
Although market value plays a vital role in helping you determine the value of a property, However, there is another factor that affects the price of properties. Which is emergency – how urgent the seller needs the property sold?
Imagine a situation where two houses are listed for sale. They’re absolutely identical in every way – same size, same condition, and next door to each other. The only difference is the situation of the person selling:
- The seller of house #1 is in no rush to sell: they’ll leave it on the market for as long as it takes to get the best price
- The seller of house #2 absolutely must sell the property within 10 days because of an emergency.
Which of the houses do you think would sell for less? House #2 obviously. And this is because the seller doesn’t have time to wait for the best offer.
But to know whether or not a particular purchase price is “BMV”, you first need to know what the normal “market value” of the property is.
Another way to determine the value of a property is …
Location is an important factor as the demand for homes in certain locations has significantly affected the value of homes in those areas and how much the houses sell for.
Knowing how to evaluate the value of a property is very important if you want to be a successful real estate investor. Thus, every prospective investor should learn it because it will help you get good deals a lot. You wouldn’t have to buy properties way above market value.
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