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Factors that affect apartment market values

A picture of a couch and wall and a lamp

Colliers Residential Valuation Department

A real estate appraisal is most often ordered when a mortgage loan is required for the purchase of an apartment. The valuation is developed in accordance with Latvian Property Valuation Standard LVS 401:2013, which also complies with International Valuation Standards (IVS 2022). Based on valuation standards and valuation methodology, the appraiser is guided by a number of factors that can affect the valuation result, i.e. the real estate market value.

The most popular factors influencing the market value, important to pay attention to before buying real estate, are as follows:

1. Completed reconstructions. Determine their compliance with the Latvian Building Code and their legal status. It must be ascertained whether arbitrary reconstructions have been carried out in the object that are not coordinated (for example: demolition/addition of load-bearing or non-load-bearing partitions, installation of a sanitary unit/kitchen above the living spaces of the lower apartment, glazing of the loggia, addition of common rooms, illegal construction of a heating system). If a construction project has not been developed for the object, a certification card has been issued, a new inventory file has been prepared, or the reconciliation process has been started but not completed, it should be expected that the appraiser will consider this as a factor negatively affecting the market value, which, depending on the complexity of the arbitrary construction, adds additional time, potential issues, and costs.

2. Rationality of room planning. Take notice of whether the composition of the premises is functional and efficient enough for its best use—living. We recommend paying attention to the proportion of outdoor spaces from the total area, the height of the rooms, and the ratio of the total area to the number of living rooms.

3. The overall technical condition of the residential building and its sustainability. Regardless of how thoroughly the apartment has been renovated, the building in which the apartment is located should be taken into account.

4. Location of real estate. The market value is closely related to the location of the object. Location is one of the main fundamental factors of market value, reflecting market activity and market attractiveness. Familiarizing yourself with the surroundings of the object and its potential in the future is recommended—what development projects are planned in the near future, as this can either raise the market value or, on the contrary, lower it.

Appraisers take into account and carefully evaluate all these abovementioned factors, and they affect the market value of the apartment, therefore, when choosing a new home, before making a final decision, it is important to invite a knowledgeable independent expert who will pay attention to more important factors and determine the objective value of the apartment.


Related Experts

Ieva Barone-Libeka

Consultant | Valuation Department

Riga

Ieva's professional working experience in real estate valuation industry is 8+ years. Before joining Colliers International, Ieva worked as real estate appraisers assistant for 4 years at one of leading local real estate company in Latvia, where professional skills were gained by evaluating properties of different complexity. In Ieva's working experience has been done many residential and agricultural property valuation statements, commercial property, such as building properties with historical significance, shopping centres, logistics centres and industrial properties.

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