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How do estate agents determine property prices

How do estate agents determine property prices

One of the most common concerns that home buyers have about purchasing property is whether the asking price is fair or not.

One way to avoid overpaying for your home is to research what similar properties have sold for in your area. If you’re about to buy or sell property, you’ve probably wondered how estate agents determine property prices. 

If you want to buy or sell property, one thing you must do before the transaction can take place is agree on the property's price. Estate agents play an essential role in this process, as it’s their job to assess the house's value, sell house fast and ensure both parties are happy with the price set. Several factors determine how estate agents determine property prices.

The true cost of property ownership

Owning a home is expensive. Not only do you have to pay the mortgage every month, but you also have to pay for repairs, maintenance, and improvements. And, of course, there are always unexpected costs that pop up. So how do estate agents determine property prices?

Several factors go into setting the price of a piece of property. The most crucial factor is the market value. This is determined by looking at comparable properties in the area that have recently sold.

Competitive market analysis

Real estate agents will conduct a competitive market analysis to find out what a property is worth. This involves looking at similar properties that have recently sold in the area and considering the current market conditions. By doing this, they can get an accurate idea of what your property is worth and what price it could sell for.

Supply and demand

The most fundamental law of Economics is the law of Supply and Demand. Regarding real estate, the number of properties available for sale (the supply) compared to the number of people looking to buy (the demand) will help dictate pricing. If there are more buyers than sellers, prices will rise. If there are more sellers than buyers, prices will fall.

The condition of the housing market in an area

The condition of the housing market in an area determines the property cost. If a region is going through hard times, this will have a knock-on effect on the home values. For example, increased crime and unemployment rates would decrease property values. Generally speaking, people are more inclined to move when house prices rise. People tend to stay put when they start to fall again because it's cheaper to live there.

Location matters

Properties in desirable locations will cost more, while properties in less desirable locations will cost less. The most expensive areas are usually located close to amenities and major transport routes or near prestigious schools or universities.

The condition of the property

Estate agents consider the property's condition when determining its value. If the property is in good condition, it will be worth more than a comparable property in poor condition. A newer home will usually be worth more than an older one because it will have features buyers are looking for, such as energy efficiency.

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