You have decided on the house you want to buy, but are you paying for the real value of the house or are you paying more than it is worth? In this article, we will describe in two different ways how you can determine whether the requested price is the right price.
How is Real Value of House Calculated?
- Can be Calculated According to Monthly Rent Bedline
- Comparable to Homes in the Same Location
Determination of Value According to Monthly Rent Bedline
It is the simplest but most realistic method of determining the value of a house according to the rent price line. In any case, the price of any asset is calculated as the present value of money that the asset will acquire in the following years. If we take the house rent as the owner’s money, we can use the total rent amount to be received in the coming years (as we will detail below) as a factor determining the house value by using certain factors. In simpler terms, a high house value for rent is higher and a lower house value for rent is lower.
In Turkey, the average house value is calculated as 214 months’ rent, while in Istanbul this average is 212 months. The story that these figures tell us is a shame: if you see the house as an investment (which is the biggest investment decision we have made in many people’s life decisions), the return of the money you have invested in will be about 18 years. Of course, because we are a country with high inflation, there will be an increase in rent in the meantime, but the increase in rent is not an important factor for this calculation method.
The return period of a home investment is approximately 18 years in Turkey. So, 214 times the monthly rent is a good first guess for a house.
One thing to note here is that in very high-value houses these multipliers can increase quite a lot, which means that the investment return period can be long. Especially when you find millions of values, rent multipliers can rise to 30 or even 40 years.
Generally accepted times are 14-16 years for work places and 17-20 years for houses. In this case, it can be accepted that the average rent of 214 months gives the house price. For example, let’s assume that you want to buy or rent an equivalent house for 1,500 TL. In this case, we can calculate the market value of the house as 321.000 TL (214 * 1.500 TL).
In the meantime, how the value will increase after you buy the house is another matter. You can do this with our home value calculation calculator.
Determination of price by comparing with houses in the same position
This method is the most commonly used method, but it is not enough by itself.
The position of a house is the most important factor determining its price. Not only the district but also the neighborhood, even the street of the house, can lead to considerable differences. It is very important that you compare the prices of the houses for sale that are the same or similar with the house you want to buy in the real estate sites. On this page you have determined the average prices of the house mates. In order for this method to be healthy, it is necessary for you to have close features of the house you wish to buy with the houses you compare.
The properties we list below are properties that add value to homes in general.
Additional value added features:
- Centrally located
- Rich transportation facilities
- Being a new building
- The front of the apartment
- Placement of the circle on the intermediate floor (roof, top floor, basement, or outside the first floor)
- On-site elevator available
- Having a view
- Having common areas (sports hall, social facility, etc.)
Do not skim the prices per square meter (m²) of similar houses in the vicinity of the real estate offices around the house that you want to buy. This method is also used by real estate appraisers. The real estate appraiser gets the estimated m² price of similar houses from at least three real estate offices and multiplies by the square meter of the house he tries to measure.