The real story: What’s behind market appraisals?
Even when you think you are following the market, prices in Sydney can change so quickly that you may not be as up-to-date as you think. Setting the right price is important in the current market to ensure you attract the right buyers and achieve the sales price you’re hoping for.
What is a market appraisal?
A market appraisal is an informal valuation of your property’s current market value by a licensed real estate agent. It serves as a guide to where the market is heading and what sales price you can hope to achieve should you sell in the near future. It’s not legally binding but rather a first step to assessing the market and setting a price guide and sales expectations should you go on to sell.
How is an appraisal different to a market valuation?
A market appraisal is conducted by a local real estate agent and is free of charge. A market valuation is a formal written report by a certified valuer that assesses your property’s value based on factors such as its size, features and local sales of similar properties over the past six months. Market appraisals tend to be more forward-looking – where the market is heading – whereas market valuations look back at historical sales. This makes the latter a more conservative approach, which is why banks require them.
What are the benefits of getting a real estate agent to do a market appraisal?
A free market appraisal conducted by a knowledgeable local agent gives you a solid and realistic idea of your home’s current worth. It’s also a good opportunity to pick the brains of local agents and find out more about what has been driving local sales recently so that you can achieve the best possible price. The agent will also be able to inform you about any recent or upcoming changes in the area that could have an impact, such as rezoning laws or new developments. They’ll also be able to explain the sales process and tell you what – if anything – you’d need to do to prepare to sell your home.
How is a market valuation determined?
A real estate agent with strong local knowledge will easily be able to appraise the worth of your home based on their in-depth knowledge of the local market and recent sales. They’ll consider factors such as how it compares in price, features and location to recent sales, as well as current levels of buyer demand, what other properties are about to come on the market, days on market for local properties and auction clearance rates.
When you should get an appraisal
Obviously, you’ll want to get an appraisal for your property before you put it on the market. Even if you are not selling, it’s still wise to get an appraisal every now and then so you know your options – particularly if the market is changing rapidly. An appraisal helps you make sure that your home loan equity, building insurance and overall asset value are all up to date. An appraisal costs you nothing and gives you certainty about the value of your most important asset. It’s a great way to get to know your local agent, and build a relationship with them, as well as seek their advice on any possible renovations or improvements.
How to get an appraisal
Any real estate agent should be happy to offer you a free property appraisal. Ideally, you should have a few good local agents provide appraisals. This not only gives you a strong ballpark figure but it will help you get to know local agents, see how they work, and whether you want to use them when it comes time to sell. Remember that the most reliable appraisals will come from agents who are actively selling similar properties in your local area and have an established track record.
Should you go with the highest price estimate?
The short answer is no. Not unless that agent is also the one who clearly has the best local knowledge. Experience, marketing strategy, negotiating skills, a good contact book and trust are also critical to a successful sales process.
If you get a few appraisals and find that the figures vary considerably, this could be the result of an agent over quoting to try and get your business or an agent who lacks sufficient local experience. In either case, you should also be researching recent sales prices for similar properties to confirm the estimates you’re getting seem right.
Want to know more about assessing your property’s current market value?
Book a chat with an experienced DiJones agent today and get the information you need.