How to calculate the market value of a house in Kenya
Whether you are a seller or a buyer, when estimating the market value of a property you must take into account a multitude of factors including Real Estate Market Trends Kenya in 2019.
Estimate the value of your home
Personal Estimate: A simple and economical way to value your home is to make comparisons of property prices with other homes in your area.Consider the following:
Location: town or countryside
Type of Dwelling: apartment, townhouse, house three or four facades
Size/Number of rooms (completed): living room, separate kitchen, bath and shower rooms, bedrooms, veranda, etc.
Age and Condition of the house
Standard of Completion: basic / luxurious finishes
Calculate the price per square meter based on classified ads in the area. Divide the selling price by the total area. Multiply the price per square meter by the number of square meters of your home to get an idea of its value.
The value used by municipalities for taxation purposes should be avoided when determining market value as they do not always reflect recent market fluctuations. This results in market values exceeding municipal assessments by several percentage points.
The “peer method” is a simple and the most common way to estimate the value of a property. It consists of comparing the property with other properties with similar characteristics that have recently been sold in the same sector. Check a minimum of four comparables. Positive or negative adjustments are then applied based on the discovered differences.
For example, if all four comparable properties have a double garage, while your property has only a single garage, it should be revised downward.
The replacement cost technique consists of calculating the land value and the replacement cost of the building and the land. Note that other factors influence the calculation. The replacement cost method is useful when it is difficult to find comparables (inactive market, special purpose or non-standard building, new construction).
For rental properties, the income method roughly consists of applying a discount rate on net income.
Again, it is advisable to refer to a professional.
Given the importance of a real estate transaction, the cost of obtaining the expertise of a professional appraiser is worthwhile. For an evaluation on a bungalow or apartment the evaluation could cost ksh 40,000 – 60,000/-
An evaluator should come recommended with a good standing in the real estate business. Non-member professional evaluators can also provide excellent services.
Be aware, however, that unlike their certified colleagues, they are not governed by the strict Professional Code.
Some real estate brokers have knowledge of valuation and in many cases, correctly estimate the value of a given property. However, it is recommended to deal with an independent person who is subject to a professional order.
Estimates can vary widely from expert to expert.
Your needs and wishes
Supply and demand have a significant influence on valuations and home sales. Even with the help of an expert an estimate remains an estimate. Your personal situation must also affect your selling or buying price.
For example, if the supply is greater than the demand in the desired sector, take the time to look around and negotiate.