How To Find The Value of a Home
Determining the value of a home is key to setting a price that is not too high, in which case it scares off potential buyers, and lets the property sit on the market for too long. Contrarily, if a home’s asking price is too low, home sellers may lose out on the potential financial gains the sale might have brought.
When it comes to estimating an asking price for a home that is on sale, it does not pay to base the approximate price on guesswork. A lot of factors come into play when determining the price of a home, least of all what you might think it’s worth.
There are a number of ways in which you can estimate how much the property that you are looking to sell is worth. In this article, these will be set out and discussed at length, helping you and your qualified and experienced real estate agent to put your property on the market at a price that will see it sell in the shortest possible amount of time.
1. Utilise an Online Home Value Estimator
With the Australian housing market – just like other property markets around the world – constantly in flux, what your house was worth five years ago is probably not what it is worth now. Basing an estimate house price on what you bought it for is not conducive when trying to determine an asking price today.
In this regard, utilising online home value estimator tools can assist you in getting the gist of what your property might sell for.
Technically referred to as automated valuation models, online home value estimators make their predictions of what a property is worth, based on listing prices and recent sales in the city or suburb you’re selling in, together with matters of the public record, like property transfers, deeds of ownership, and tax assessments. Using mathematical models, all this information may give an accurate estimate of what your home might realistically be worth.
Of course, online home value estimators like Lendi and Value Our House can only provide estimates, and an assessment of what your property is worth does not guarantee that it will ultimately fetch that specific price. Small renovations may lead to huge financial rewards when the house sells, while market conditions may bring the selling price of a house down when conditions are less favourable. This is why it is of paramount importance to also consult with your real estate agent about the value of your home.
Your agent will be able to make recommendations about repairs and renovations that could add value, while also taking into account the market factors at play in the city or suburb they do business in.
2. Research The State of the Housing Market
Your local housing market will certainly affect the price your home is able to get when it is sold. Together with the state of the national housing market and the global property market at large, the way the market is performing will have a significant effect on what a home is worth.
Keeping an eye on the news is a great way to get the gist of how the housing market in Australia is performing. Analyses of the property market are regularly released, leading to speculation about how it might affect the housing market in specific cities or suburbs.
There are already a few predictions for how the property market might perform during the rest of 2019, but it is pertinent to remember that markets are flexible, and that any predictions can still change in an instant, should certain external factors affect the way the markets perform.
When interviewing candidates to help you sell your property, ask potential real estate agents about how the property market in your suburb or city has performed historically, and enquire about their predictions for the immediate future. This will give you a good indication of a real estate agent’s expertise and experience within the property market of the location they are based in, and will help you decide which real estate agent is right for you.
3. Ask Your Real Estate Agent to do A Comparative Market Analysis
Another aspect your real estate agent can assist you in is in doing a comparative market analysis of your property. By doing this, real estate agents are able to determine what the highest, but most realistic selling price is. This is done by conducting an in-depth evaluation of comparable homes that have been sold in a specific area over the past 6 to 12 months.
A comparative market analysis takes into account the type of property you’re selling, it’s size and features, the suburbs and local area, as well as the homes surrounding it. The school district within which your home resides may also have an influence on the comparative market analysis. In terms of your property, a comparative market analysis looks at the interior features, exterior features, mechanics, yard features and location, and the style of the residence.
When your real estate agent conducts a comparative market analysis, they will be able to make an estimation of the value of your home with all factors taken into account, and advise on an asking price that is both fair and attainable, with the possibility of making the profit you’d like to make on the sale of your home.
4. Hire an Appraiser
It is important to note that there is a difference between the assessed and appraised value of a property. While the assessed value of a home refers to the tax value of a property, the appraised value is determined by a professional appraiser who takes various features pertaining to the property into account, including things like the type of construction, the size of the property, the condition of the property, its location, and recent sales of comparable properties within its vicinity.
The comparable properties in the vicinity, or comps, have a big influence on the appraised value that is eventually placed on your house, as the value estimated for your property should not surpass, or be significantly less than other properties in the same suburb. The appraisal value of a property functions as protection to lenders and buyers against artificially high home prices. Even if a potential buyer is willing to pay the amount that a seller wants for it, lenders might be hesitant to lend an amount if there is a significant difference in the value of comparable properties in a suburb.
The appraised value of your property is also known as its market value, and might differ from the assessed value, or be relatively similar, depending on the periodic nature of assessments that are done – these are usually done on a 1 to 3-year cycle.
Having a home appraisal done will give you a good idea of the market value of your home, and will of great value when estimating what your property is worth.
5. Compare The Home to Others in The Area Online
A quick online search is the first line of action for most homebuyers, and it’s fair to say that this is the way in which most people first become aware of what is available in specific cities or suburbs.
As such, your home will be listed among the many other properties for sale at any given time, and buyers will inevitably compare your house to other comparable properties in the area. Remember that the way your property is perceived is key to making an impression on potential buyers.
As far as online listings go, they will give you a good idea of what comparable properties in your city or suburb are selling for. When looking at comps online, keep in mind that you’ll have to compare your own property to properties of similar size, condition and location – a house just like yours might sell for a different price in Sydney than it might in Hobart.
Why Knowing a Home Value is Important
Knowing and understanding what your home is worth is invaluable in determining an asking price for your property that is attainable, but still leaves room to make a profit.
While home sellers could feel a little sentimental about their property, allowing their subjective feelings to influence what they think their property could sell for, there are other ways to determine the value of a home and estimate the right selling price.
Online home value estimators are the first step in determining the value of a house. These automated valuation models can give homeowners predictions of what a property is worth by utilising a standard technical and mathematical model.
It is better to follow a few avenues when determining the value of a property, and home sellers will do well to also include a comparative market analysis, a professional home appraisal, combined with thorough local housing market analysis and online comparisons in their arsenal of tools.
The most valuable asset you have when selling your home, though, will be the real estate agent you choose to help you get it sold. Still wondering how much your home is worth? Let Perfect Agent recommend real estate agents you can trust. Our agents understand the markets they work in, and will be able to determine the value of your property and make realistic recommendations on how much it can ultimately sell for.