How to estimate property value: 7 tips to value property

How to estimate the value of a property?

for a new home or selling a property, it’s useful to know a property's value.

Accurate values give buyers and sellers budgets, may be needed for
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There are a few ways to value a property, including the following:

• Estimating a property's value yourself
• Using online tools and resources
• Approach a real estate agent or bank for a property valuation
• Mass appraisals from a government/official body

Estimating a property price yourself - 7 tips to estimate property value

It's useful to know how to determine the value of the property you’re looking for. While this is by no means an accurate estimate, it helps you get an idea of the amount of money you’ll spend.

There are several different ways to value a property. In this article, we’ll focus on the market value. This is the final price the buyer agrees to pay the seller. It’s based on a comparative market analysis and differs from the listed price.

When estimating property value, there are a few things to consider. Comparing the property you’re looking at with similar ones is a good place to start. Here is a step by step guide on how to do it.

If you're ready to start the home loan and valuation process, why not reach out to speak to one of our expert brokers.

1. Focus on your local area

Look at the recent sales near the property you’re interested in. If the house is in an urban area, search for sales within a 1km distance. If it’s in a countryside region, expand the perimeter a bit.

Only consider sales made during the last six months. The more recent the sale, the more relevant the price is. Of course, look for types of homes that resemble the one you’re interested in buying.

2. Look at similar properties

Limit your search to properties that are like the one you’re looking to buy. In doing so, consider the following features:

• Dimensions: Look at the total size of the property. Compare the dimensions of the living area and the surrounding land area
• Locality: Focus on properties that are at the same distance from local facilities. These include main roads, schools, and transport lines
• Interior: Compare the number of rooms in both houses. See if there are as many dining rooms, bathrooms, and bedrooms
• Exterior: If the property you’re interested in includes a garage, find others that do. Also make sure the number of parking spaces is equal or at least comparable
• Condition: Only look at properties that are similar in quality. Consider how they’re built, how old they are, and what their current state is
  
  In some cases, the information you need won’t be available. If so, use
  

3. Compare the features of the properties

Now that you have gathered all the information, it’s time to do some comparison. In this phase, you’ll determine how similar the properties are to the one you plan to buy.

Take all the features listed above into consideration. Decide if the house you’re looking for is superior or inferior to the ones sold in the area. When doing that, be realistic.

Once you’ve compared the properties, exclude the ones that don’t fit the bill. You will now have a better idea of how much a property you’re interested in could cost you.

4. Know the market

Because you’re looking at the market value, you need to adjust your estimate to changes in the market. In the current economic climate, the market is changing very fast. The sale prices of houses from six months ago may not be relevant anymore.

Going to auctions and open house events in the local area will give you the idea of how hot the market is. You can also talk to an expert who will inform you on the current state of the real estate business.

If you want to be the successful bidder and secure your ideal home or investment property, you need to do some preparation before the auction and then employ some smart strategies on the day.

5. Consider market factors

Considering some further factors can give you more insight into the state of the market. Look for the following figures that will help you get the idea of how properties are selling at the moment.

• DOM (Days on Market): This is the number of days it takes for properties to sell. It’s an average value, calculated from the day of the listing to the sale date
• Median Price: Specific to local areas, this number denotes the average worth of a house. This number often includes properties still in development and may not be reliable
• Clearance Rates: The number shows the percentage of houses sold in auctions. It includes properties sold during the auction, as well as before and after. This is a good indicator of the current demand in the local real estate market
  
  Note that these numbers may not always be relevant. Most of them are at least a month old by the publishing date. While they are good as indicators, they don’t provide the up-to-date view of the market.
  
  

6. Avoid these common property value mistakes

When investing in property, buyers tend to make some mistakes. Using the notes highlighted here, they are easy to avoid. Here are some of the usual mistakes people make when valuing property

• Buyers are unaware of the real estate market conditions. If you’re buying or selling a property, it’s important to know how hot the market is right now
• Sellers have strong emotional ties to their houses. This makes it difficult for them to appraise the value of their property. They’ll often ask more for the house than its actual worth
• People compare properties to those currently on the market. Properties that are still on the market only have a list price. This price is in no way indicative of what they’ll sell for in the end
• The goal of real estate agents is to sell a property. Sometimes they’ll tell you that there are competitive bids on a house you’re interested in. They will also exaggerate when talking about the prices of comparable properties
• People compare properties that aren’t similar. When valuing properties, it’s important to compare them with those that resemble them. This means they should be similar in location, size, and quality
• Buyers invest in brand new properties. Government offers incentives for buyers who choose to invest in new properties. This increases the demand, thus inflating the actual value
• People use unreliable sources of information. Popular media focuses on prognoses and sensationalist expert statements. Reliable sources of real estate information base their stories on facts and statistics

Online tools and resources

Everything is at our fingertips nowadays, including abundant property value insights.

Websites like Realestate and Domain offer home price guides with historic sales and estimated property values.

Other worthy mentions include Property Value, Real Estate View, OnTheHouse, Home Guru and OpenAgent.

Real estate agent property valuation

A valuation is more thorough, unlike an estimation. It is a detailed report on the property's market value based on a multitude of factors like size, suburb, market trends, and more.

If you are thinking about selling your home, real estate agents often provide free property valuations.

Consider approaching agents in your area for a valuation - though you should ensure it is obligation-free.

It is also common for real estate agents to visit certain neighbourhoods and offer free valuations.

Mass appraisals

Mass appraisal is how the government estimates property prices.

It considers a range of data including geography, property characteristics, land size, market factors, and more to statistically determine a property's worth.

This is typically done to all properties annually by state Valuer-General offices, hence the 'mass' part of the name.

Council rates are commonly based on how much a mass appraisal has determined your property to be worth.

For a more detailed guide,
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If you're ready to start the home loan and valuation process, why not start the process online now.