Valuation of property and determination of premiums

Generally, real estate are considered heterogeneous products. Each and every property has its own specific traits which NO OTHER UNIT possesses. Properties are not like mp3 players or clothings and apparels where the products within a single batch all offer the same "service" to the buyers. For instance, properties will always either be on different floor levels or different facings. It is difficult to place an accurate figure on the price one should pay for a property. In addition, it is tough to place a monetary value on the premium of certain aesthetics as their appeal or the opposite is often emotional. For instance, the value of a desirable 20th floor flat is diminished if it looks directly into the neighbour's living room because of the building's design. Thankfully, there's always valuers (NOT valuators) to put a monetary value on the property. In Singapore, almost all residential properties are valued via a common technique known as the "sales-comparison". This process uses the transacted data from the similar and comparable properties as a gauge to estimate the market value for a property. This technique works best when there are (1) sufficient property transactions within the last 6 months and (2) the properties are regarded as similar or comparable to the subject property. As a rule of thumb, valuation and real estate experts suggest the following premium features within a property. Tenure - Freehold properties generally calls for around 10 - 20 % more in value but of course, remembering to compare likes with likes; a brand new 99-year leasehold property could still be more expensive than 150 year old freehold property. Facing - Beachfront properties should garner around 5% premium. But be watchful of the expressways and noise that could be in close association. Having the morning sun is also more appreciated than having to return home to a steaming hot home baked by the setting sun (~$10,000) Accessibility - Being close to MRT has been reported to raise a property's value by up to $20,000. Amenities - Premier schools have generally allowed sellers to price their properties higher due to the higher demand. Unit number - Auspicious numbers such as 6 and 8 are more sought after than 4.