Before you decide to sell your home, you need to determine its market value. The question is, how do you do this? A first-time seller may calculate its worth by matching it against what similar properties in the area are asking. You may go online to compare its size and features, such as its number of bedrooms, etc., and leave it there. By factoring in all the parallels, you may think this is all that matters. It seems like a reasonable enough method to estimate a suitable price for your property. However, don’t rely solely on this approach. You have not taken every factor into consideration.  Likewise, online home value estimators are popular but equally unreliable. Your best bet is to set up a free property appraisal with a proven real estate agent. Let’s take a look at why you should get a free professional property appraisal.

Online Property Estimators – Are They Good?

With online home value estimators such as Value Our House, it is a straightforward procedure. You enter your address, describe your property, and receive a report calculated from estimations made from various sources. They may put you in touch with a consultant, or maybe not. You probably chose this method to avoid reaching out to a licensed real estate agent for whatever reason. That’s your business. You then go to a competitor’s site, which uses the same criteria to provide a valuation. Maybe they are dissimilar enough to have you scratching your head at the difference, even if it is only slight. Will you settle on a price from one or more of these sources, believing you have gotten expert advice? Comparing data in an abstract fashion is different from knowing the area and talking with buyers. It is less satisfactory than having experience of actually selling in the market.

However, it is understandable why some of these methods may appeal. We are being increasingly conditioned to live our lives online. We shop online, we bank online, and we communicate online with our friends. This has led to a disconnect whereby we feel that the Internet can answer all our problems. It certainly provides us with good advice and useful information at our fingertips. Businesses are springing up constantly to take advantage of this trend away from real-world engagements. This makes sense because people like to distance themselves from projects that may waste their time. Why visit a library when you can read anything you want online? But a house is a physical object, and the property market is populated by buyers wanting to live within its walls. Therefore, it takes people to know their neighbourhoods and understand what others are prepared to pay. It needs a real estate agent.

Two Types Of Estimates

As we delve into the topic of free property appraisal, we learn there is more to it. It isn’t simply a matter of coming up with a single value for your property. Assuming we have ditched the DYI appraisals and opted for an experienced professional, we address the first. And again, from the seller’s perspective. A property’s market value is appraised by a qualified real estate agent. They judge its potential sale price on all the contributing factors. These include location, what similar properties are selling for, their state of repair, and the standard of features. In essence, they make an estimate of what buyers are likely to be willing to pay. Alternatively, its assessed value is contingent upon the property’s tax value. A Certified Practising Valuer is needed for this, as any mistakes may cost you penalties with the Australian Tax Office.

Despite the fact that the distinctions between the assessed sales price and its appraised value differ, the processes for determining each does not. Both the real estate agent and the CPV are looking at the factors that either increase or decrease the value of a property. As a result, a real estate agent’s appraisal, while useful for determining an agreed-upon price, won’t suffice as the appraised value. The variation is relative. One is what a buyer would be willing to pay, and the second is what the taxman wants to know. For obvious reasons, the buyer doesn’t wish to overinflate the property’s value as far as the ATO is concerned. By the same token, the institute financing their home might be reluctant to provide financing if the estimate generally differs. For instance, if their valuation finds other homes in the same area for sale at a much lower cost.

When Is The Best Time To Get a Property Appraisal?

Following the purchase agreement, the buyer may request a home value appraisal. Indeed, they may have stipulated a contingency clause in the purchase agreement. This agreement is a contract detailing the terms of sale as agreed between the buyer and seller. The aforementioned clause may state that ownership of the home is transferred to the buyer only after a comprehensive valuation. This provision gives the buyer peace of mind. It obligates the seller to negotiate a lower price if the property turns out to be worth less than the asking price. Naturally, a smart seller will have double-checked the accuracy of their original estimate. They will have engaged a professional agent to perform an accurate appraisal from the beginning. They should have obtained more than one if they were truly savvy. This gives them leverage against any suspicions the buyer may eventually have.

All the same, the seller will be doing themselves a favour by not attempting to over-value the property. All in all, valuations are essential, and no sale can continue without them.

The Different Property Appraisals

The real estate agent employs three appraisal methods: the sales comparison method, the cost approach, and the income method. The first technique uses market data to compare the worth of the property to similar houses in the same neighbourhood. This is the strategy we outlined earlier, which is prefered by financial institutions. The cost method considers the cost of land, the price of construction, and the property’s depreciation. The latter may be taken to mean that either the house structure or the neighbourhood itself is failing. For example, if the crime rate rises dramatically, the value of the residence will fall. Meanwhile, the construction cost considers not just the materials used to construct the property, but also the labour involved. It calculates not just the costs of what went into it but what may in future. Therefore, this is known as the projected “replacement cost.”

By the end, the appraiser has used all three of these methods to arrive at the final valuation and sales price. Each method has been carefully employed and its measurements examined. To be sure, it is a tight system. By this stage, the seller should be left with no uncertainty as to the true value of their property. This is the point where the seller has set their price and enters the market. Fingers crossed. Market forces might intervene to drive up the value of the property. Maybe a bidding war will start. Anything goes in a seller’s market, and this is where every seller hopes to be. Regardless, both the seller and the agent can be satisfied with a starting point at which to commence their sales strategy.

Conclusion

A property appraisal is a necessary step in the process of selling your house. You’ll need a competent real estate agent who is familiar with all of the techniques we’ve mentioned. To calculate the right sales price for your house listing, you should not leave it to a web service alone. Only an experienced real estate agent with knowledge of the neighbourhood and a solid background in sales is qualified. Contact Perfect Agent today to arrange a free property appraisal!