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How to assess a property's value?

property value
property value

Do you wish to sell your house or apartment? Estimating a property’s value is a crucial step for a successful sale. Surface area, location, obsolescence - there are many criteria to take into account when calculating the price of your property. In this article, we will help you objectively assess the value of your main residence.


How to assess the price of your main residence?

Are you considering selling your main residence in the near future? Estimating its value can be challenging, yet it's essential for setting the right selling price.

Each apartment and house are unique, so there isn't a one-size-fits-all price. By heeding our guidance, you can begin to appraise your property, ensuring your pricing reflects current market conditions. This valuation will form the foundation for discussions with potential buyers. Your aim? To ascertain the market value of your primary residence.

Unsure about the concept of a property's market value? Banque Piguet Galland provides clarity. Market value is the price at which your property is likely to sell in the prevailing market conditions within the next 12 months. These valuation factors in aspects like location, size, construction year, room count, energy efficiency, and the property's age.


Discover the various methods for assessing the value of a property

There are several methods to value a primary residence. Your private bank outlines the most common approaches to determining a property's worth.


The hedonic or comparable value method

The hedonic method values a property by comparing it to actual transaction prices in a specific market. It's the calculation method most commonly used by real estate professionals and banks. This approach allows you to ascertain the average price buyers have recently paid for properties similar to yours.


The yield value of real estate

The yield value represents the annual rental value, capitalized. It's derived from the net rental income and serves to estimate the value of a property meant for rental investment.

For properties rented on an open-ended lease, the yield value is considered. Naturally, this method isn't used to determine the price of a primary residence.


The intrinsic value of your main residence

The intrinsic value, often termed 'real value,' represents a property's worth based on its original price, adjusted for depreciation due to time and obsolescence. Unlike the hedonic method, it doesn't factor in market dynamics or the principles of supply and demand. Consequently, the intrinsic value tends to be higher than the market value.


What criteria should be taken into account when estimating a property?

For your project to become a reality, accurate property estimation is crucial. Purchasing a primary residence often represents a significant milestone in a person's life, with much at stake. Owners frequently overvalue their houses or apartments due to a lack of objective consideration of all relevant criteria. Here are the essential factors to remember for the most precise valuation.


Take all the characteristics of the property into account

A property appraisal is based on several different characteristics :

  • Type of property: This includes apartments, lofts, houses, villas, chalets, etc.
  • Surface area of the property: This helps in calculating the price per m². It takes into account factors such as the living area, the size of the plot, and the surface area of any garages.
  • Quality of the property: This pertains to aspects like insulation, choice of materials, amenities, size of the garden, potential for extension, year of construction, and energy rating.
  • General condition of the property: This includes its overall state and any necessary repairs or renovations.


Location: the number 1 criterion

Often, the city or neighborhood plays a crucial role in estimating the selling price of a property. For instance, purchasing an apartment in the center of Lausanne is not the same as buying a house in Bulle.

When estimating a property's value, it's important to consider the attractiveness of the area, including:

  • The variety of property types for sale based on location.
  • Accessibility, transportation, and parking.
  • Proximity to economic hubs.
  • Availability of services like schools, public utilities, hospitals, and shops.
  • The quality of the local environment and nearby community, cultural, and sporting initiatives.

The better the quality of life and services, the higher the demand for housing, which in turn drives up property prices.


The property's immediate surroundings

As you're likely aware, an apartment that isn't overlooked or one with an unobstructed view always fetches a higher price!

The valuation of a property should also consider the unique characteristics of a neighborhood: nearby disturbances (like roads or railroads) or, conversely, the tranquility of the area. Factors such as the terraced nature of the property, the beauty of the immediate surroundings, nearby buildings, and population density also play a role. Additionally, the estimate should account for potential future changes in the environment, such as upcoming construction or new roads.


The reality of the local real estate market

Evaluating the price of your primary residence isn't just about numbers and square meters. It's essential to interpret the data in the context of the local real estate market. That's why Banque Piguet Galland advises its customers to work with an expert who knows the area intimately.

For an objective and dependable property valuation, your advisor should compare your home with the most recently sold properties in the same vicinity. Their estimate is based on the actual sale prices of apartments or houses, not merely the prices listed in real estate ads.

Once the valuation is complete and the price per m² is set, the advisor then needs to assess the potential of your primary residence in comparison to similar properties for sale in the same town, district, or street. These steps are vital for a trustworthy property valuation.


Does the energy efficiency of your home make an impact on its price?

Today, an evaluation of energy performance is crucial when determining a property's value. Apartments or houses that are more energy-efficient tend to attract more potential buyers. For instance, homes with a high energy performance rating (HPE or THPE) typically command higher prices than those in need of insulation or other upgrades. 


Why invest and entrust your real estate projects to experts?

Investing in real estate is a significant life decision that demands careful consideration. Whether you're looking to purchase your first primary residence or venturing into a new real estate endeavor, Banque Privée Piguet Galland provides customized financing solutions and guidance for acquiring your main home.

Remember, real estate remains a sound investment. It not only safeguards your loved ones but also serves as a preparation for retirement. Moreover, it's an effective strategy to reduce your tax obligations.


Did you know? Energy renovation is a process that allows you to preserve the value of your property. It is also a way to reduce energy consumption. Find everything you need to know about energy renovation in our guide.

Any questions about financing your real estate project? Our academy is a good starting point. Find everything you need to know about real estate financing here.

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