6 Factors That Influence The Pricing of Property

Bluman Properties 2019

In Kenya, the value of properties has remained to be a popular subject of discussion. As time passes, buyers have been forced to deal with the ever-increasing prices of properties which have led to a popular question; what or who decided the price of the property? One thing that is evident is that determining the value of the property isn't a one-time thing.It involves several considerations and factors before setting up a price tag on a home or a piece of land. To come up with property prices, there are flexible and inflexible factors to consider.

• Flexible Factors are those manipulated factors put in place by the investors to fit in a certain standard. Inflexible factors are those factors investor have no power over.
• Location and Neighborhood of the Property

This is the most dominant factor both buyers and investors put into consideration first. The neighborhood and location are the main factors that influence the sale price. Location comes with convenience aspects regarding how close or far the property is from the social amenities such as schools and hospital. The price properties close to such amenities will definitely be higher as compared to the one far away. The neighborhood is also important as investors and buyers tend to look at aspect such as security before making the final decision of purchasing the property. A place with less experienced crime will be more costly.

• Comparison of the Recent Sale Prices

Comparison of the recent sale price is another common pricing method used to consider the prices of property in the real estate market. It helps the real estate agents and investors to determine how much a property is worth in a particular area so as not to under price or overpriced property. Once you compare the neighborhood price, you will get a proper reflection of the current market value of the property regarding the quality and type of the house or land. When using this method, you need to be careful since it's only an outward comparison and it does not put into consideration the fact that finishing, furnishing, and features might be different, which usually make property prices to vary.

• The Cost of Initial Investment

The initial cost of a property incurred by the investor plus the acquiring and cost used in its improvement is another factor to consider when determining the price of a property. While selling a property, no one wants to incur a loss; thus before deciding on the sale price, the summary of the costs incurred is usually calculated first. Nevertheless, some improvements to the properties may be of intrinsic or sentimental value which could work well for the owner, but the buyer might not see it not worth the amount you are asking for, leading to a loss. Thus, it is advisable to consult a real estate expert who is knowledgeable in the market rate of properties to determine for you the amount you can invest so that you won't go beyond the point of recompense. When it comes to determining the prices of the properties,inspection reports can work to the advantage of the buyers. Professional is the one who conducts the inspections since they will be able to alert you on previous uncovered issues which may need interventions such as infestations. In fact all a home is found with issues that need repairs, the price will go down in favor of the buyers since the price of fixing those repairs will be on their part. If at all the house is found to have no issue and is in perfect condition, the price will automatically be a bit higher.

• Demand against Supply

The country's economic state plays a major collective role in determining the property price. It involves aspect such as demand and supply in the market, inflation, interest rates, and investment appetite. Once the property demand increases in a certain area, the selling price will increase automatically.Due to buying pressure which may cause the demand to drop, then the seller is left with no other choice other than dropping the sale price. The demand and sale of property depend largely on the investment appetite of an area.

• The Loans Interest Rates

Due to the current economy, many individuals depend on bank loans and other loaning agencies to invest in properties. If the interest rate of these loans ate high, it would be non-affordable to many people, making them shy away from investing. This will lead to low demand in the market, causing the selling piece of the property to drop. On the other hand, if the interest rates of the loans in low, the rate of investment will upsurge making the price of the property to increase too.

• Regulations and Restriction of the Place the Property is Located

The regulations and restrictions of the place the property is located will significantly affect the kind of investment which can be made in that area thus affecting the sale price. Areas that are specifically restricted to residential use will have a sale price corresponding to it, and the same applies to areas restricted to industrial or commercial use only.