How much is your home worth today? This is how the real market value is calculated

How much is your home worth today? This is how the real market value is calculated

The value of a property can vary significantly depending on several factors. It is important to understand how the real market value is calculated in order to make the right decisions when selling your home. This article examines the key elements that influence property valuation, as well as the most commonly used methods to determine its price.

Key factors in determining the real value of your home

The value of a property does not depend solely on its size or the price the owner wants to obtain, often influenced by emotions. There are multiple variables that directly influence real valuation, from location and property characteristics to legal and tax aspects.

Location and local market

Location is crucial when valuing a property: the neighborhood, city, and region matter, as well as how well situated it is.

Importance of neighborhood and region

Location remains one of the most decisive factors. A property in a big city is not the same as one in a rural or coastal setting, and even within a city, not all districts or neighborhoods behave the same. Demand, supply, and price trends per square meter can vary greatly depending on the area, municipality, or even the region. Areas with a good reputation, established services, and future growth potential tend to maintain or increase their value over time.

Access to services and transportation

Proximity to schools, healthcare centers, shopping areas, or public transport stops also influences the perceived value. A well-connected home with easy access to essential services will be more attractive, increasing its market price.

Property features and condition

Square meters and layout

The built and usable surface area is one of the basic data points for establishing valuation. However, just as important as size is the interior layout: well-planned homes with spacious and functional rooms are more attractive than poorly designed ones, even if they are larger.

Renovations and maintenance

The general condition of the property also carries weight. A renovated, well-maintained, and updated home can achieve a higher price than one in need of work or in poor condition. In addition to full renovations, small updates can also increase market value.

Differentiating features

There are additional elements that can add value to a property. Swimming pools, private gardens, terraces, storage rooms, or parking spaces are highly valued features. Energy efficiency also matters: thermal insulation, efficient heating/cooling systems, or renewable energy sources increase both valuation and appeal.

Legal situation and tax burden

The legal and fiscal status of a property directly influences its valuation and must be carefully reviewed before putting it up for sale.

Cadastral value and reference value

The cadastral value and reference value establish the fiscal base for taxes such as property tax (IBI) or municipal capital gains tax, as well as verifying there are no discrepancies with registry or urban planning records.

Although the cadastral value does not represent real market value, it does affect the tax burden and can have consequences in a sale.

Tax implications in a sale

Identifying possible encumbrances—such as mortgages, liens, or easements—is essential to avoid legal issues. An accurate valuation also allows you to anticipate the tax impact of the transaction, especially regarding income tax on capital gains. If the declared price differs significantly from the fiscal reference value, reviews or penalties may arise.

Common methods to calculate a property’s market value

There are several methods for estimating the value of a home, each with its own characteristics, limitations, and level of precision. Knowing them is useful for both owners who want to sell and buyers or investors who want to make informed decisions.

Comparison with similar properties

This is the most common and reliable method: it analyzes the price per square meter of similar homes in the same area, adjusting for surface, condition, orientation, and extras. Its accuracy depends on the quality and timeliness of the data, which is why professional guidance is key. If you want a professional valuation and to set the right price for your property, the Engel & Völkers team can help you.

Cost and depreciation method

This method is common in new builds. It adds the land value and construction cost, subtracting depreciation due to use or age. It is useful when no direct comparables exist.

Income method (rental yield)

Interesting for investors, this values the home based on the annual rent it can generate. It is especially applied to properties intended for long-term or vacation rentals.

Online valuations: useful but limited

There are automatic tools that offer quick estimates based on big data. While useful as an orientation, they do not replace a professional valuation, since they do not consider key aspects like real condition, improvements, or legal status.

How to correctly interpret your home’s value

Knowing a property’s value is not enough: it is equally important to interpret it correctly in order to make the right decisions. A misunderstood figure can lead to an unrealistic asking price, failed sales, or loss of profitability. That’s why it is essential to distinguish between different types of value and understand how they change over time.

Difference between estimate and real selling price

An estimate is just that: an approximate figure, based on automatic calculations or general comparisons.

The real selling price, however, is the one achievable in the market at a given time, taking into account factors such as urgency of sale, property presentation, market demand, or even the buyer’s profile. Actions like home staging—preparing the property to maximize its appeal—can make the difference between a quick sale and missed opportunities.

It is also important to note that urgency to sell can affect the real selling price.

Market price vs. official appraisal

Market value should not be confused with the official value recorded in a technical appraisal or administrative documents. For example, a mortgage appraisal may be influenced by a bank’s conservative criteria, and cadastral value is usually well below real value. These figures are useful but cannot replace a specific analysis of the area and current context.

Constant updates to value

Property value is not static: it may increase or decrease depending on market evolution, tax policies, or even lifestyle trends. The Engel & Völkers Annual Report is a key tool to understand how prices vary by area, property type, or specific demand.

Common valuation mistakes that affect a sale

When setting the asking price, many owners make valuation mistakes that can slow down or even block a sale. Among the most common are:

• Overestimating the property’s value due to emotional attachment or based on renovations that do not always translate into immediate returns.

• Ignoring the real state of the market, setting an out-of-context price that drives away potential buyers from the start.

Avoiding these mistakes and having an accurate valuation from the outset can make the difference between selling in a few weeks or keeping the property on the market for months.

When valuing your home, you can start with digital tools that give you a first estimate. However, if you want precision, reliability, and a well-defined sales strategy, the best option is to rely on an experienced professional in your area.

At Engel & Völkers, we offer you a professional valuation of your property, based on real market data, an accurate comparative analysis, and a deep understanding of local demand behavior.

Because knowing your property’s value is only the first step. The important part is knowing how to sell it successfully.