The Real Estate Valuation Calculator provides an estimated market value for a property based on key factors. It's a simplified model, often used as a preliminary assessment or for comparing potential properties. The core idea is to leverage data from recent, similar sales in the vicinity and adjust it based on the specific characteristics of the property being valued.
How it Works
This calculator uses a common approach in real estate appraisal: the Sales Comparison Approach. The fundamental principle is that a property is worth what similar properties have recently sold for. The calculator takes the following inputs and applies a valuation model:
Property Size (sq ft): The total finished living area of the property.
Number of Comparable Sales: The count of recently sold properties that are similar in size, features, and location. More comparables generally lead to a more reliable estimate.
Average Price per Sq Ft of Comparables ($): This is derived from the sales of comparable properties. It represents the market's typical price for each square foot in that area. (e.g., If 5 comparable homes sold for a total of $1,750,000 and had a combined size of 5,000 sq ft, the average price per sq ft would be $1,750,000 / 5,000 = $350).
Condition Adjustment (%): This accounts for how the property's condition compares to the comparables. A positive percentage indicates the property is in better condition, while a negative percentage suggests it's in worse condition. This adjustment modifies the price per square foot.
Location Factor: A multiplier that reflects the specific desirability or disadvantages of the property's exact location compared to the general area of the comparables. A factor greater than 1 indicates a more desirable location, while a factor less than 1 indicates a less desirable one.
The Calculation Formula
The valuation is calculated using the following steps:
Calculate Adjusted Price per Sq Ft: Adjusted Price/SqFt = (Average Price/SqFt of Comparables) * (1 + Condition Adjustment / 100)