Getting a Home Loan in Australia if you're living overs...
29 Nov 2023
Whether you’re buying or selling, it’s important to know what the value of a house is. Here’s how to find out the true value of a property.
Finding the true real estate value of a property is a must for home buyers and sellers. But how do you value a house? In this article, we’ll show you everything you need to know about how to value your property.
Keep in mind that property values are not the same across the board. A property’s value depends on a number of factors like location, size, amenities, architecture, and the like. House prices in Sydney and Melbourne, for instance, aren’t good indicators of what a house deep in the suburbs of Adelaide might be worth.
Now, you’re probably wondering ‘how do I find out what my house is worth?’ There are a number of ways to find the value of a property. Which method you choose should depend on what you need the property value for.
A property valuation, also known as lender valuation, provides the definite value of a property as stated in the valuation report. Property valuations can only be done by professional property valuers. A property valuer will calculate the value of a home based on the following:
A property valuation report can be used for legal and estate settlements, and typically required by lenders. This also helps buyers as it reduces the risk of overpaying on a potential property. And this gives sellers a better understanding of their property and lets them know how they can improve its market value.
A property appraisal determines the market value of the property. The market value refers to how much a property might sell for based on current market trends and recent sales in the area. This is usually done for free by a real estate agent.
Unlike a property or bank valuation, an appraisal is much less conservative when it comes to estimating property value. And it is more often subject to change depending on the current state of the local market.
If you’re selling a property, then an appraisal is a great no cost way to get your property’s estimated value. With an appraisal, you’ll have a better idea on what your property’s price range is and what you can do to better compete with similar properties in the area.
There are a few ways you can get a good estimate of your property’s value without a property valuer or a real estate agent. One of the easiest is by getting a free property report. At loans.com.au , you can get the latest rich property data which has all the information about a specific property like estimated value, previous sales history, and details about the suburb.
Your free property report includes:
Look at the property report carefully and make sure you understand the factors that affect property values.
You can also estimate a property’s value through comparison. Look at similar properties in the area to get a handle on how much your property should be valued.
Here’s what you should consider when comparing properties:
There’s no point in comparing a two-bed, one-bath property against a four-bedroom, three-bathroom home with a pool because the extra bedrooms, bathrooms, and amenities pushes that property into a different price range. Properties that were built earlier can also have vastly different values.
Look at recent local sales, as well. To get the most accurate property estimate, look at property sales from three months or less. Property sales from six months ago or older may no longer be relevant since the property market is always changing.
There are a lot of ways you can find the value of your property. However, there are also a lot of ways you can get it wrong. Keep these common pitfalls and mistakes in mind when you’re estimating your property value:
Don’t compare similar properties in different neighbourhoods. They might have the same features and amenities, but their local markets are entirely different. It’s also not wise to compare newly-built properties versus established ones because they are also priced differently.
For the most accurate results, always compare similar properties in the same area built within a few years of each other.
It's always best to use a few different sources when market data. Check out different real estate websites or read various magazines or newspapers. Talk to more than one real estate agent to get a really good idea of what a specific market has to offer. Or go to auctions yourself.
We can’t help but feel attached to our homes. But sentimental value usually gets in the way of getting an accurate property value. When figuring out how to find the value of your home, it’s best to look at objective facts and figures.
If you don’t know your auction clearance rates from your vacancy rates or the difference between a passed in home versus one sold under the hammer, it’s time to brush up on your knowledge of the property market.
The same applies if you don’t really understand what’s happening in terms of property prices in your area, and at a capital city and national level. The best way to get started is to begin attending auctions and open homes in your area, talking to real estate agents, and keeping up with news about the property market.
If you’re thinking about buying a home, calculate your borrowing power here to know how much you can afford.
As Australia's leading online lender, loans.com.au has been helping people into their dream homes and cars for more than 10 years. Our content is written and reviewed by experienced financial experts. The information we provide is general in nature and does not take into account your personal objectives or needs. If you'd like to chat to one of our lending specialists about a home or car loan, contact us on Live Chat or by calling 13 10 90.