Understanding how your property's value is determined is critical. Below we explain what an appraisal is and why it is important for you to obtain one, regardless of if you're selling.
How to use competitive properties to work out a value
Spend time inspecting similar properties that are currently on the market, however, do be aware that their asking price does not necessarily equal true market value. The most consideration should be given to properties that have SOLD in the past six months.
Try to compare your property with homes that are equal to yours. For example, look at properties that are a similar land size or apartments that have comparable floor space, the same amount of accommodation and bedrooms on offer, the style of the home and whether it is renovated or dated, the condition of the property and importantly its location, particularly proximity to amenities and lifestyle attractions such as parks and beaches.
Consider features your property may or may not have. For example views of the city, water or parkland, a swimming pool, secure level garden, garaging, level lift access if you live in an apartment complex, luxury inclusions or special eco features such as solar panels and rain water tanks. On the downside, being on a busy road or having no outlook in an area where many homes enjoy views may affect your sale price and this should be taken into consideration when determining value.
Once again, the best person to turn to is your agent. They should be a wealth of knowledge and familiar with what features of your home will offer the most appeal to buyers. Not only this, they should be able to provide you with valuable data and research material to help you make an educated assessment of your property’s value.
How to research the market
There are many ways to find out what your property may be worth as well as the impact of what current market conditions may have on your sale.
Check the times and dates of local open homes and up-coming auctions and attend as many as you can. The interest in these will help you understand the market conditions and help you gauge your home against the rest of the market.
Check in with your real estate agent or an agent who is particularly active in your area. They should be able to provide you with an abundance of free property sales information from a number of reliable sources.
Australian Property Monitors and RP Data are online providers of property data and information, who are highly reputable and for a small fee will supply you with the same reports agents and banks use to assess property values. Reports worth purchasing are postcode data, street history, auction results, and market trends to name just a few. But ask your agent first as they may well be able to provide these reports for you for free.
The weekend paper’s property lift out is another valuable source of up to date market information as well as recent sale information and auction results.
Websites like www.domain.com.au, www.realestate.com.au and agent sites like www.ljhooker.com.auare another good place to find out what is for sale in your neighbourhood. These sites also provide commentary and articles relating to current market conditions.
The Purpose of a Property Appraisal
A property appraisal is an informal estimate of what your home may be worth, which is commonly given as a free service by real estate agents. It is an educated opinion based on recent, comparable sales data in your area, current market sentiment plus the agent’s insight into the features of your home that will either create a lot of buyer interest and competition or any negative features which may limit interest and the price buyers are prepared to pay.
It is worthwhile to request an appraisal from a number of agents before you choose who you are going to use to sell your property. However, it is also important to do your own research so you can either agree or disagree with the agent, as well as understand the rationale behind their pricing strategy.
How is a Property Valuation Different?
A property valuation is usually performed by a Certified Practicing Valuer for an agreed fee. They are not real estate agents or associated with any real estate agency. A valuer will inspect the property, carry out research and analysis into the local market and provide a detailed report regarding issues affecting the current market value of the property.
A property valuation service is commonly required by a bank or financial institution prior to approving a home loan. It is also used by buyers and sellers wanting an independent opinion prior to pre-purchase or pre-sale, family or partnership settlement, capital gains tax and in some instances building insurance.
What is a Seller’s Market and How Can it Affect Your Price?
A seller’s market reflects the return of consumer confidence and a strong economy. It occurs when buyer demand outweighs housing supply and greater competition will inevitably drive property prices up.
With the likelihood of competitive bidding, a seller’s market will see increased auction success. However, you need to take into consideration that the real estate market is very segmented, properties at the lower end generally always attract strong buyer interest, while properties at the high end may struggle for attention.
What Impact Does a Buyer’s Market Have on the Sale Price?
This is a common real estate term referred to when market conditions favour buyers. In a buyer’s market, there are typically a large number of properties for sale and fewer buyers. This may come about because of rising interest rates and a slowing economy.
In a buyer’s market, sellers will generally need to be competitive with pricing in order to achieve a sale. Great results are still obtainable and your real estate agent should be able to offer the right advice and best approach
Why is it important to have an appraisal if I am not selling?
When preparing for the future there are several things that you may need to know the value of your home for. These are 3 of the most common reasons;
Future Downsizing contributions into superannuation
From 1 July 2018, if you are 65 years old or older and meet the eligibility requirements, you may be able to choose to make a downsizer contribution into your superannuation of up to $300,000 from the proceeds of selling your home. If you are considering downsizing in the future or making contributions to your super from your property/properties then knowing the potential sale value is important.
Aged Care Bonds and Nursing Home Costs
Given that Australian middle-income families have about 58 percent of all household worth tied up in the value of their home, the forced sale of the house to pay an accommodation bond and nursing home costs is often required. If you or your parents may need to be going into an aged care facility in the near future then you will need to know how much the sale of the property/properties would contribute these costs.
Preparing your will and inheritances
As executor of an estate, one of your most important tasks is to sell the home of the deceased so that it can be distributed (with other assets) to the beneficiaries. This can be an emotional time for the family of the deceased especially if the property to be sold is the family home. When preparing your wills and estates it is best to have an updated appraisal on your property so that you can properly determine what your beneficiaries will be inheriting. These types of appraisals should be updated yearly and can be booked in with your local real estate agent.
While these three reasons can be slightly morbid, they are not things to be forgotten. Knowing what your property is worth will make sure that you are prepared for any situation that comes your way.
Having an appraisal with your local real estate agent once a year is definitely recommended. Most agents will be happy to schedule a routine appointment to pop in and say hi while providing you with updated information on the market.