How to valuate property you are buying?

How to valuate property you are buying?
By AT Bureau

The rate told to by the seller of the property is not a final word. You can determine the value of the property by applying certain parameters. Property rates are not determined by any government departments nor it enforces you to buy the property at any rate. Stamp Duty Authority only gives the rates at which, according to them, is the rate and the stamp duty is applicable. They cannot force you to buy the property at a less price or more, according to their ready reckoner.
Then who determines the property rate? It is you. Now take an example: Mira Road property rates are less then of Bandra or Pedder Road. Why?
Any property has to be weighted on certain parameter like location, distance from CBD, civic and infrastructure development in the area, Municipal Ratable Value, Fair Market Rent, Age and condition of the building, water and power availability, Distance from railway station and transport, communications including postal services, Police, cost of construction and so on.
Mira Road or Navi Mumbai are lacking in distance from main CBD area of Mumbai, transport and time taken to reach the city, water and power, less municipal ratable value compared to Bandra depending on Fair Market Rent. These areas also lack in transport services, which are more superior in Pedder Road or Bandra.
Land and FSI are the major component in cost of the property. Land or FSI cost is higher in Pedder Road than Mira Road. Because the area is in the main city and having access to any part of it, the supply is less and demand is always there for any rate, the land cost keep on raising unaffected by any economic trend.
Now let us find synonymous aspects in Mulund and Borivali. Mulund, which is recently has been developed is a new zone in Mumbai, whereas Borivali was established long back. Needless to say that Borivali is having better infrastructure, a junction for long distance trains and a final stop before the Mumbai limits. Mulund was initially a industrial area. Mass housing and new buildings will come up for next ten years. The supply will be more than Borivali. Land cost is less and civic infrastructure is still waiting for final setup. Power cuts on Fridays by MSEB gives negative points. Then why Borivali and Mulund is having same price?
Mulund will be next junction for main land. New buildings gives extra open space and quality constructions. It is because of boom in buying properties, Mulund, like any other area in the country also has its trend.
One and half year down the line, Borivali was selling for Rs.2800/- per sq.ft. And above, whereas Mulund and Bhandup were selling for Rs.1800/- per sq.ft and above.

Now since we know how to give weight to various aspects of the property, let us valuate areas of your choice.
You need to give marks to following from 10 to 100 and optimise the deal.
Location
Age and quality of construction
Civic amenities like hospitals, schools, gardens, markets etc.
Near to Police station
Distance from
Air Ports
Railways stations
Work Place
Shopping
Schools/ colleges
Area preference by Financial Institutions
Slum in the area
Social Infrastructure
Connectivity
Property and other tax
Multiply your total marks (percentage) by Rs.3000/- per sq.ft. ( cost of land + construction cost) in Mumbai and by Rs.1200/- for outside Mumbai like areas beyond Borivali and Mulund. For example if your total comes to 1000 than the cost of the property should be Rs.30,00,000/-.
You will be surprised that flats are costing above Rs. 60 lakhs for 2 BHK within Mumbai limits, but the formula is showing otherwise. It is mainly because land purchased by the sellers or builders are at a very high cost. Amenities and quality of construction also matters. But these things can be negotiated. If there is no buyers, the market will be forced to correct it self. It will be sheer madness, unless it is crises, to buy properties in boom time. Remember CBD Belapur is still a Ghost Town.