Property valuation: how do you determine the market value of a property?

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How much is my house worth? A crucial question, especially when it comes to selling your property. When it comes to property transactions, which are often associated with major financial investments, it’s vital to take a thorough and forward-looking look at property valuation. Sellers and buyers often have different perceptions of the real value of a property. It is therefore advisable to value a property with the assistance of an expert in the field, such as FGP Swiss & Alps.

Definition of the market value of a property

The market value of a property is the price it is expected to fetch within a year under normal market conditions. Several factors influence the value of a house or flat.

What factors influence the assessment of property value?

Determining the value of a property is based on a number of criteria, including :

The local property market
The regional job market
Location and immediate environment
Proximity to public transport
The presence of educational establishments
Proximity to shopping centres
Neighbouring recreational areas
The density and type of surrounding buildings
Potential uses, such as parking spaces
The year the property was built
Living area and land value
The layout and distribution of the rooms
The level of equipment and facilities
The property’s energy performance
Property price trends in the region

How do you correctly estimate the value of a property?

Valuing a property provides a valuable indication of how much it will sell for. However, estimating the market value of a property is complex, as each property is unique. It is essential to consider each property and plot individually.

There is no universal “fair price”, nor any standard price list that can be applied. The best approach is to assess the value of a property in order to arrive at an estimated and realistic selling price, which will serve as a basis for negotiations. The aim of any valuation is to determine the market value of the property.

Use of market value

Market value is used for inheritance purposes and by insurance companies. It plays a crucial role in granting mortgage loans, as the loan is based on the market value assessed by the bank, even if the purchase price is higher. The buyer must then cover the difference between the purchase price and the market value with his or her own funds, which must not come from the 2nd pillar (no early withdrawals or pledges).

Three methods of property valuation

Depending on the purpose and nature of the asset, various valuation techniques are used. The three main methods are :

Hedonic method or comparable values method

This approach is based on actual property transaction prices. It uses statistics to break down a property into its component parts (location, size, number of rooms, etc.) and thus determine the average price of comparable properties. Banks and online calculators often use this method.

Yield value

This method assesses the sustainable rental value of a property, which is particularly relevant for investment properties (rented residential and commercial properties).

Intrinsic Value

It is calculated from the replacement value (cost of rebuilding the building) less depreciation due to age, plus the value of the land. This method is preferred when there is insufficient comparative data for the hedonic method, for example for properties in isolated areas or luxury properties.

When is it appropriate to use an expert report?

A property valuer is recommended for valuing specific properties, such as luxury properties, buildings in need of renovation, those with large plots of land, unique or ‘coup de coeur’ properties, and historic buildings. The valuation report produced provides not only an estimate of value, but also a detailed analysis of the structure of the property.

How do you value a prestige property?

The prestige property market is very different from the traditional property market, mainly because of the unique expectations of wealthy buyers. The valuation of a top-of-the-range flat or house is based on specific criteria that transcend the usual considerations.

Key features of prestige property

Facilities and special features: beyond standard criteria such as location, surface area and number of rooms, it is the facilities and special features that define and add value to a luxury property. Features such as a spacious balcony, a terrace, a private garden, a swimming pool, a top-of-the-range kitchen, a bespoke dressing room, a hammam or a luxurious bathroom all add significantly to the value of the property.

Uniqueness and rarity: buyers of prestige properties are looking for uniqueness. This means that features that are rare in a given area, such as a villa with a swimming pool in the city centre, can significantly increase the value of the property. Conversely, the absence of features typical of top-of-the-range properties in the area can reduce its value.

The importance of professional expertise

Although owners can value their property themselves, valuing a luxury property can be complex. Sellers may overvalue their property for emotional reasons, or undervalue it due to a lack of knowledge of the market. It is therefore advisable to call on the services of a professional specialising in prestige real estate, such as a specialist agency like FGP Swiss & Alps, a notary or a consultant. These experts take into account the dynamism of the local market and the unique features of the property to set an attractive price for wealthy buyers.

Frequently asked questions about property valuation

What influences the value of a property in Switzerland?

Location: location is a key factor, including proximity to services, schools, transport, etc.
Size and layout: living area, number of rooms and general layout.
Condition and age of the building: newer or renovated properties may have a higher value.
Current property market: supply and demand in the region, as well as general economic trends.

How does a property valuation work in Switzerland?

Professional valuation: a property valuer evaluates the property taking into account various factors such as location, size, condition and market comparisons.
Use of software: computer tools can be used to compare the property with similar properties.

What is the difference between an estimate and a valuation?

An estimate gives an approximate value based on an analysis of the surface area, while a valuation is more detailed and takes into account more technical aspects of the property.

How much does a property valuation cost in Switzerland?

Costs can vary depending on the size and complexity of the property. Some services may be free, while more detailed professional valuations can cost several hundred to several thousand Swiss francs.

Is it necessary to have a property valuation to sell a property?

Although not legally required, an estimate can help to set a realistic selling price and attract potential buyers.

Are online estimates reliable?

Online estimates can provide an initial indication, but they are no substitute for a professional valuation, as they do not take into account the specific features and current condition of the property.

How long does a property valuation take?

This can vary from a few days to several weeks, depending on the complexity of the valuation and the availability of the expert.

Can a property valuation affect my property tax in Switzerland?

The estimated value can influence the tax value of the property, which is used to calculate certain taxes. However, tax valuation methods may differ.

Do I need to prepare any documents for the valuation?

Yes, it is useful to provide documents such as plans, renovation surveys, inspection reports, etc.

Can a property valuation be used in negotiations?

Absolutely, a professional valuation can be a powerful tool when negotiating the sale or purchase of a property.

Good to know: it is always advisable to consult local professionals for specific advice tailored to your situation in Switzerland. Would you like to carry out a property valuation? FGP Swiss & Alps can help you with your property project.