The fourth step is to conduct a financial examination of the property you intend to buy or sell.This financial examination aims to determine the property’s value objectively, compare it with the market price, and calculate potential profits or losses.
Here are some things to check in the financial examination:
- Property appraisal: Conduct a property appraisal using appropriate methods, such as the comparison method, cost method, income method, or a combined approach. You can perform the appraisal yourself or hire professional property appraisers. Property appraisal considers factors such as location, size, condition, facilities, market demand, and more.
- Market price: Compare the property value with the prevailing market prices in the same or nearby location. You can gather market price data from the internet, print media, property agents, or property appraisers. Market prices indicate a fair value for the property and provide insights into property demand and supply in that location.
- Profits or losses: Calculate potential profits or losses from the property. If you plan to buy the property, calculate the difference between the purchase price and the property value, considering potential appreciation or depreciation in the future. If you plan to sell the property, calculate the difference between the selling price and the property value, taking into account expenses incurred for the property, such as taxes, maintenance, renovations, and more.