How do you find out the value of a property?
As an experienced buyer’s agent, I’m here to share some helpful advice. Estimating property value is a highly prized skill.
You may be wondering:
“Can I just learn how to value property myself—why engage a buyer’s agent?”
Let me explain:
While the techniques are indeed acquirable, mastering them requires significant time and consistent market engagement—a time luxury you may not have. That’s where professionals like us step in, bringing years of honed expertise to the table.
But:
If you’re in the market for a new home, considering investing or just trying to improve your real estate know-how, it’s critical to at least grasp the basics of property valuation.
Let’s dive in.
Ways to Value Property
When estimating property value, there’s no single magic formula. Instead, it’s about combining several approaches to get a well-rounded view.
Be Active in the Market
One of the most effective ways to understand property values is to immerse yourself in the market. Here’s how:
- Watch the market for at least six months: This isn’t a quick process, but it’s necessary. By observing the market over time, you’ll start to see patterns and trends that aren’t apparent at first glance.
- Inspect at least 50 properties: This might sound like a lot, but each property you see adds to your knowledge base. Focus on the type of property you’re interested in.
- Attend property inspections: Seeing properties firsthand allows you to assess their condition, layout, and features in a way that online listings simply can’t convey.
Analyse Comparable Sales
Looking at recent sales of similar properties is a cornerstone of property valuation. Here’s what to keep in mind:
- Focus on recent sales: Look at properties sold within the last six months. Older sales may not reflect current market conditions.
- Compare apples with apples: Try to find properties that are as similar as possible to the one you’re valuing. Comparing houses and units and matching characteristics like the number of bedrooms and bathrooms is part of this process.
- Consider location carefully: Location can significantly impact value even within the same suburb.
The Valuation Process
1. Gather Comparable Properties
Start by compiling a list of recently sold properties that are similar to the one you’re valuing. Look for properties in the same area, preferably on the same street or in the same suburb. The goal is to find properties that match size, features, and location as closely as possible.
2. Analyse Market Conditions
Before diving into the comparisons, assess the current market conditions. Are you in a buyer’s market or a seller’s market? In a seller’s market, properties often sell quickly and for a premium. This might mean adjusting your valuations upward. In a buyer’s market, where properties take longer to sell, your estimates might need to be more conservative.
3. Rate and Compare
Once you have your list of comparables and an awareness of the market, rate these properties in relation to the subject property. Look at properties that are better, worse, and similar. This helps you position your property within the current market landscape.
4. Consider Transaction Speed
Pay attention to how quickly properties are selling. In a hot market, properties might be snapped up within days of listing. In a cooler market, they might linger for weeks or months. This transaction speed offers valuable insights into the current state of supply and demand, which directly impacts property values.
5. Make Informed Adjustments
Based on your analysis of comparables and market conditions, make informed adjustments to your valuation. If properties similar to yours are selling quickly and above the asking price, you might need to adjust your estimate upward. A downward adjustment might be necessary if they sell slowly or below the asking price.
6. Final Assessment
Bring all of this information together to form your final valuation. The key is to make an informed decision about the property’s value based on your knowledge of the market and your collected data.
When Expertise Makes a Difference
Why Valuation Is Also About Opinion
Experience and insight are just as important as data when it comes to property valuation. Even with thorough market research and comparable sales data, valuation remains, to some extent, subjective. The final estimate often comes down to a professional’s educated opinion. This is why different experts might provide slightly different valuations for the same property.
The Subjectivity in Property Valuation
Everyone has a unique perspective on appraisals, whether they are certified valuers or real estate agents. They analyse the data, compare recent sales, and consider market conditions—but their own experience and judgement influence their final estimate.
This is where the expertise of someone who has been in the industry for years can make a significant difference. My approach involves not just looking at the numbers but also understanding the nuances of the market and justifying every valuation with solid reasoning.
Case Study
Here’s a real-world example that illustrates the importance of expert insight.
I recently encountered a property where the vendor had set a price that, based on my analysis, was actually below market value. The seller was likely motivated by the need for a quick sale. Recognising this, I advised my client to act swiftly, and we secured the property.
Just a few months later, the property was valued at over $150,000 more than what we paid. This case demonstrates how professional expertise can help you spot and capitalise on undervalued opportunities, ensuring you make a profitable investment.
When to Call in an Expert
While anyone can learn to estimate property value, there are times when professional expertise is invaluable. If you’re unsure about your own valuation or if the stakes are particularly high, consulting with an expert can give you the confidence to proceed—or the wisdom to walk away.
Conclusion
Estimating property value combines market knowledge, analytical skills, and practical experience. While anyone can learn these techniques, mastering them takes time and consistent effort.
Are you thinking about buying a property but concerned about its true value?
Don’t hesitate to reach out for a chat. Our appraisal and negotiation service is designed for people who have found a property themselves but want expert guidance to understand what it’s worth and assistance with the negotiation.
My property valuation and negotiation expertise can help ensure you’re making the right decision, whether that means moving forward with confidence or knowing when to walk away.
