The price of your property may be incredibly influential to buyers; therefore, it’s an extremely important piece of information to get right. But how do you know how much your property is worth? Here is an summary of the different methods you can use to determine the value of your property.
How Much Is Your Property Worth
The price of your property may be incredibly influential to buyers; therefore, it’s an extremely important piece of information to get right.
But how do you know how much your property is worth?
To determine the value of your home, you can get an inspection from a certified and professional valuer.
Valuations will cost money, but will provide you with an unbiased and informed assessment.
Professional valuers are independent. This means they are not associated with any real estate agency, so can give you an unbiased figure.
Information is compiled into a report and then sent to banks and lenders. A property valuation is often required when you apply for housing finance.
Valuers will usually use one of the following methods to assess your property:
Direct comparison: This assessment is based on a comparison of recent sales in the area of homes similar to yours.
Capitalisation: Mainly used for investment properties, this method involves the application of an investment yield to determine rental income.
Summation: This method involves the assessment of the value of the land. The value of improvements such as structural buildings can be added on top.This method is usually undertaken when there are insufficient comparable sales of similar properties.
Real estate agents give free market appraisals and can apply their local market knowledge and expertise judgment of recent sales in the area to provide you with a figure.
They won’t just include their own sales, but will analyse others in the area to give you a good idea of your property’s value.
This will give you an informal estimate of how much you might be able to receive from the sale of your home.
The figure you’ll be provided will most likely be based on recent results for the area and market conditions, plus the agent’s insight into the features of your home.
What’s the Difference?
A professional valuer may provide you with a figure that does not reflect or represent an individual’s interest in the home and is merely based on market analysis. This could mean a lower value figure, which could lead you to underprice the home.
However, an agent appraisal is informal and can differ between real estate agents. The figure an agent provides will reflect how much they think will be obtained if you list with them.
Important Points to Consider
Don’t set the price of your property based on one valuation. Instead, obtain a couple of quotes from various real estate agents and use that information combined with a figure determined by a professional. This will help you to set a fair and achievable price.
Be aware of how your emotions may affect your decision. While everyone can think their home is worth $1 million, it’s not always the case! Be realistic about your pricing and talk over any areas of concern with your agent, as he or she is the expert.