Finding Out How Much Your Property is Worth
It is a question pondered by most homeowners – what price would their property fetch if it was put onto the market?
The task of determining a home’s worth is not so straightforward. In fact, much is dependent upon valuations, appraisals, the bones of the property and what’s happening in the boarder economy.
When selling it is essential to know a home’s value to be able to determine an appropriate price guide to attract buyers. Even if you are not considering listing at the moment, it is still a good idea to keep an eye on how home values in your suburb are tracking.
So, how is it all worked out? Let's take a look at some of the key predictors.
Defining your market
In Australia, the housing cycle is also influenced by housing supply, demand, population growth and even Government incentives. These can cause the market to fluctuate, which has a significant bearing on real estate values. It is not uncommon to hear the terms - a seller’s or buyer’s market – and either will increase or decrease the perceived value of your home.
Determining the current type of market is particularly important for sellers, as it means they can think strategically about their preferred method of sale. For instance, selling at auction can be a good decision in a hot market due to the likelihood of strong competition. It can also work in a slow market too – if there is interest and you need buyers to make a decision quickly.
Seller’s market
In real estate, a seller’s market exists when there are fewer homes for sale than there are buyers. This means that vendors have more negotiating powers than prospective purchasers. Typically, in a seller’s market, homes do not stay on the market for long periods.
A seller’s market will also see homes fetch at, or above, the listing price and auction reserve. This is because the low number of houses for sale drives up competition between potential buyers. A vendor may receive some attractive pre-auction offers as buyers try to purchase before the home goes under the hammer.
Buyer’s market
A buyer’s market is characterised by a large inventory of properties and few buyers. In this particular market, purchasers have all the negotiating powers. With plenty of stock available and not enough buyers, it is not uncommon to see properties stay on the market for an extended time.
This means that sellers need to be competitive and settle for lower sale prices if they want to sell in a timely fashion. It can be hard for vendors to concede conditions may have changed from the market peak and adjust their expectations. They may also need to make other concessions such as undergoing repairs or styling their property to make the home stand out from the crowd.
If you are looking to sell quickly and unsure of the best method, always speak with your agent.
How is a property’s worth calculated?
While the different real estate markets will undoubtedly play a role in dictating the price your property garners come sale or auction time, numerous other factors work together to determine a property’s actual worth.
1. Local real estate prices
Along with market trends, local real estate prices will, in most cases, also affect property values. This includes past performance and recent sales results. If a comparable property in your area recently sold for a certain price, this statistic will inform your property’s worth. Always look at properties with a similar land size, number of bedrooms and features. There is no point in comparing the sale price of a five-bedroom double-storey home on a large block with a pool to a two-bedroom single-level villa.
2. Location
Location can make or break a home’s sale price. Water views or secluded homes with no visible neighbours will command more money than a home situated on a highway. Properties with desirable locations are also easier to market and can attract good competition. Popular school zones can also add to the value of a property as well as easy access to transport.
3. Condition
When asking the question ‘how much is my property worth?’, condition plays a large role in determining value. A property that is structurally sound and in good condition will command more value. In contrast, a dilapidated property will be of decreased value.
4. Size and layout of the property
Size and layout also play a large role in determining the sale price. A property that has a backyard, front yard, five bedrooms and dual living areas will be worth more than a single-storey property with no yard.
It is also worth noting that layouts can influence the value of a home. This is simply because prospective buyers will not pay top dollar for a home where the kitchen is not centralised, and the distance between the bedrooms and bathrooms is considerable.
Whether to renovate before selling is a decision that needs careful consideration. Remember any upgrades should only be done to attract more buyers and add value. It can’t be done with your tastes in mind but what the market expects. Always speak with your local agent who can advise on changes that will help to boost the sale price of your property.
The difference between a property valuation and a property appraisal
When determining a property’s worth, sellers may want to consult a broad range of opinions. This can be achieved in two ways. Firstly, by what’s known as a property valuation. Secondly, by asking for a property appraisal.
Valuation
A Certified Practicing Valuer will factor in the condition of the property, land size, number of bedrooms, fixtures and fittings when inspecting a home. Also important is the property’s location, zoning, any planning restrictions and access to amenities. The estimated value will be provided in a detailed report. It may also include the rental value of the property.
Appraisal
An appraisal is made by a local real estate agent. It is an educated judgment on the home’s worth, taking into consideration local market insights and potential buyer interest. Real estate agents are busy working on the ground in your local area. They know what is likely to attract prospective purchasers and, importantly, how much they are prepared to pay. Agents will also provide you with valuable data and research material to help you make an educated assessment of your property’s worth, including recent comparable sales.
Determining your property’s worth with LJ Hooker
Selling a home is undoubtedly a huge undertaking. For most people, their home is their biggest asset. With this in mind, they want to get the best possible price in relation to the property’s worth.
However, determining a property’s worth is a complex process. It involves taking into consideration factors such as market trends, property features, layouts and everything in between.
When it comes time to determine your property’s worth, engage LJ Hooker- Australia’s number one real estate brand. The LJ Hooker team offer experience and excellent market knowledge. All of which combine to provide sellers with invaluable insight. For the most accurate assessment of your property’s worth, contact LJ Hooker for a property appraisal.
DISCLAIMER - The information provided is for guidance and informational purposes only and does not replace independent business, legal and financial advice which we strongly recommend. Whilst the information is considered true and correct at the date of publication, changes in circumstances after the time of publication may impact the accuracy of the information provided. LJ Hooker will not accept responsibility or liability for any reliance on the blog information, including but not limited to, the accuracy, currency or completeness of any information or links.
