The value of a residential property is influenced by several factors such as its location, size, condition, amenities, and the broader real estate market conditions. Below, we outline the key factors that affect residential property valuation and the common valuation methods used. 

 Key Factors in Residential Property Valuation

1. Location:
   • neighbourhood and Area: The location of a property is one of the most important factors in determining its value. Properties in desirable neighbourhoods or locations (such as near schools, parks, shopping areas, public transportation, or in regions with good schools and low crime rates) generally have higher values.
   • Access to Amenities: Proximity to public transportation, healthcare facilities, schools, recreational areas, shopping centres, and work opportunities can positively impact a property’s value.
   • Economic and Social Factors: Factors such as employment opportunities, local infrastructure development, and community amenities can influence the desirability and value of a residential property.

 

2. Property Size:
   • Land Size (Lot Size): The size of the land on which the property sits plays a crucial role. Larger lots offer more potential for future development or expansions, such as adding additional rooms, a garden, or a swimming pool. A bigger lot can also allow for greater privacy.
   • Built-Up Area (Floor Area): The square footage of the house or apartment is another significant factor. Larger homes with more bedrooms, bathrooms, and living space generally have higher market values. 

3. Age and Condition of the Property:
   • Property Age: The age of a property can affect its valuation. Older homes may require more maintenance or renovation, which could lower their value, especially if they are in need of repairs. On the other hand, newly built or recently renovated homes tend to have higher market value due to modern designs and systems.
   • Condition and Maintenance: Well-maintained homes with updated features, such as new flooring, kitchens, bathrooms, or energy-efficient systems, tend to be valued higher than properties with outdated or worn-out features. 

4. Interior and Exterior Features:
   • Number of Bedrooms and Bathrooms: The number of bedrooms and bathrooms is a critical factor for most buyers. Generally, homes with more bedrooms and bathrooms can accommodate more people and offer greater living space, increasing their value.
   • Finishes and Fixtures: High-quality finishes, such as granite countertops, hardwood flooring, designer fixtures, or stainless steel appliances, can significantly increase a property’s value.
   • Outdoor Spaces and Landscaping: Outdoor spaces, such as gardens, decks, patios, pools, and landscaped yards, can also add value to a residential property. These features are especially appealing in suburban or rural markets. 

5. Market Conditions:
   • Real Estate Market Trends: The overall condition of the real estate market, both locally and nationally, impacts the value of residential properties. In a seller’s market (where demand exceeds supply), property values generally rise, while in a buyer’s market (where supply exceeds demand), values may decrease.
   • Interest Rates: Low interest rates can make mortgages more affordable, increasing demand for homes and driving up property values. Conversely, higher interest rates may reduce affordability, potentially decreasing demand and property values.
   • Supply and Demand: The availability of similar properties in the area can affect the market value. If there is limited inventory or high demand, property values tend to rise. 

6. Comparable Sales (Comps):
   • Market Comparisons: A common approach in valuing residential properties is to look at recent sales of similar properties (comps) in the same neighborhood or area. This provides insight into what similar homes are selling for and helps establish a fair market value.
   • Adjustments for Differences: When using comps, adjustments may be made for differences in property size, age, condition, features, and amenities. For example, a larger lot or an extra bathroom may justify a higher price. 

7. Zoning and Legal Factors:
   • Zoning Regulations: Zoning laws determine how a property can be used (e.g., residential, commercial, mixed-use). Residential properties in areas with flexible zoning laws or potential for rezoning (for instance, from single-family to multi-family) may be more valuable due to future development potential.
   • Building Codes and Compliance: Properties that comply with local building codes and regulations are generally more valuable, especially if they are compliant with safety standards and have no legal encumbrances (e.g., violations or pending litigation). 

8. Economic Factors:
   • Local Economy: The overall economic health of the region, including factors like employment rates, income levels, and population growth, can influence residential property values. Areas experiencing economic growth or attracting new businesses and residents will likely see increased demand for housing and rising property values.
   • Buyer’s Market or Seller’s Market: In a buyer’s market (when there are more homes for sale than there are buyers), prices may be lower. In a seller’s market (when demand exceeds supply), prices tend to increase.