Are you thinking about selling your home and wondering how much it's worth? Market prices can change so quickly it can sometimes be difficult to keep up.
Or perhaps you're considering a renovation or extension and wondering if you can borrow against your home to pay for the work. Some of us choose to draw down on our loan to pay for a new car or a holiday, or we may want to give the kids a helping hand to buy their first property.
Perhaps you're planning to buy an investment property and need to know how much your home is worth before you can start scouring the market. A property appraisal or a property valuation will help you to figure out if you have enough equity to cover a deposit.
Below, we look at the different tools and methods you can use to work out how much your home is worth.
Do your own research
The internet is an amazing tool when it comes to figuring out the value of your home. Property portals and many other online tools provide free estimated values for homes around the country using publicly available data.
However, it’s important to bear in mind that these estimates use a mathematical algorithm that doesn’t factor in the condition of your home, views from the home, and any renovations or improvements you’ve made since you bought the property.
The accuracy of the estimate also relies on the number of recent sales in your area and how similar your property is to nearby properties. The higher the volume of sales and the more typical your property is, the more accurate the value is likely to be.
You can also access sales data directly by subscribing to services such as CoreLogic or SQM Research.
These companies supply comprehensive property data and analytics used by agents, banks, developers and investors as well as everyday buyers and sellers. For a fee, you can look up the sales in your street and your suburb and you can access data on properties currently listed for sale. You may also be able to find out the amount paid for properties where the sale price was not publicly disclosed.
Download our Annual Market Report for insight into your local property market.
Get a property appraisal from a real estate agent
Your local real estate agent lives and breathes property in your neighbourhood seven days a week. A licensed agent can provide an appraisal on the current value of your home based on supply versus demand, the unique qualities of your home and comparable sales, some of which they may have personally handled. This means they’re not basing their appraisal on data alone, but on physical inspections of properties, the demand for those properties and the sale prices achieved.
This informal valuation serves as a guide to where the market is heading and what sale price you can hope to achieve should you sell soon.
An agent’s property appraisal will usually include details of recent reported sales complete with photos so that you can draw comparisons with your own property. It will also include off-market sales that may not be picked up by property portals.
Pricing property is not an exact science, particularly when buyer emotions or a shortage of stock can sometimes drive prices higher than anticipated, but your agent should be able to provide a price range where you can reasonably expect your home to sell.
It’s a free service, and it gives you the opportunity to meet and get to know the agents who work in your neighbourhood.
A property appraisal from your local real estate agent will give you valuable insight into how much you could sell your property for in the current market
Get a bank property valuation
When you apply for a loan, your lender uses a certified valuer to determine the value of the home you want to buy. This figure is used to help the lender evaluate the risks of lending you money, as the home will provide the security for your loan.
The bank’s valuer can provide an updated valuation if you’re looking to borrow more funds. Some lenders provide a valuation free of charge, others may come with a fee of between $200 and $600. Because a bank valuation looks back at historical sales and is designed to help a lender quantify their risk if they lend you money, it will typically be conservative, meaning it’s likely to come in at the lower end of the price you can expect to achieve if you were to sell your home.
A conservative bank valuation can be a useful figure for minimising your own risks when it comes to borrowing against your home or working out the budget for your next home. It comes with a built-in buffer should interest rates rise or values fall.
Pay for your own independent property valuation
It’s also possible to arrange your own independent valuation, provided by the same kind of certified valuer the banks use. If you engage a valuer to do a full valuation, they will visit your home (or a home you want to buy), inspect it inside and out and write up a valuation report.
The valuer will consider the land size and the size of the property, the number of rooms, fixtures and fittings, the location and recent sales in the area. Because valuers look at property for a living, they’re highly qualified to determine conservative market value.
A final comment
Each of these tools and methods for finding out your home’s value has its merits. Some are more useful than others depending on your situation, but if you do want to list your home, or you’re just curious about your home’s current worth, getting a property appraisal from your local DiJones agent will give you a strong indication of your property’s worth in the current market.
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