How to Evaluate Property Valuation: Know If You're Overpaying

Sellers ask ₹50 lakhs, you see ₹40 lakhs value. How do you know who's right? Learn professional valuation methods.

Method 1: Comparable Property Analysis

Find 3-5 similar properties sold in the same area in the last 3 months. Compare: size, age, condition, amenities. Average their prices. This gives you a ballpark figure. Example: Three 2BHK flats in your area sold for ₹42L, ₹45L, and ₹48L. Average: ₹45L. If this one is listed at ₹55L, it's overpriced unless it has premium features the comps lacked.

Method 2: Price Per Square Foot

Divide property price by carpet area. Compare with recent comps in the area. If neighborhood average is ₹5,000/sqft and this property is ₹7,000/sqft, investigate why (premium location, exceptional amenities, or overpricing?).

Method 3: Income Approach (For Investments)

What's the rental income potential? If a ₹50L property generates ₹25,000/month rent, that's 6% annual yield (assuming 100% occupancy). Compare to other investments. If yields are below market, price might be high.

Method 4: Cost Approach

Estimate land value + cost to rebuild the structure. For older properties especially, sometimes land value alone justifies the price. For newer properties, total cost should be less than the asking price (as builder's margin erodes with time).

Red Flags of Overpricing

• Price hasn't changed after 6+ months on market • Seller rejects reasonable offers immediately • No comparable sales nearby (or only old comps) • Outdated design yet premium pricing • Unique features the market doesn't value • Area has stagnant or declining prices

Red Flags of Underpricing

• Price well below market without explanation • Urgent seller situations (forced sale, distress) • Property in premium location but undervalued • Structural issues fixable at low cost • Market trending upward while price is old Underpriced properties are rare. If something seems too cheap, find out why before assuming it's a deal.

Using Professional Appraisers

Banks will appraise the property. Get a pre-negotiation appraisal yourself (₹5,000-10,000) to support your offer. Professional appraisals carry more weight than your personal research.

Conclusion: Informed Decisions

Never rely on asking price. Do your homework, compare systematically, and negotiate based on data. This is the largest purchase most people make—spend time on valuation. Ishanya AI can help you understand market pricing in your target areas. We provide data on recent sales, price trends, and comparable properties.