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Buying a home

How to Value a Property

17 October 2017

Australia's great love affair with the property market is one of our go-to conversation topics at dinner parties, round the barbecue, and in the office tea room. Many of us love to chat about a place we just sold, a place we just bought, or a place we'd like to buy.

Whether you're a vendor or a buyer, it's good to have an idea of how much your property is worth. Vendors will want to avoid over- or under-pricing their home, either chasing away sales or chewing into their own profits, while buyers will want to know that a place they have their eye on is reasonably priced.

But how is a property's value assessed? How do you know whether that four-bedroom Californian bungalow in the suburbs is good value, or whether the vendor is dreaming?

Know the market

The simplest way to establish a home's value is to check what similar properties in the same area have sold for. Look for places that are as close to yours (or, for buyers, the one you're considering) as possible, paying attention to features like:

  • size;
  • condition;
  • number of rooms;
  • features like ducted heating;
  • age; and
  • proximity to schools, shops and transport.

That will give you a pretty good indication of the price range for houses in that market. A real estate agent will be able to provide you with recent sales figures, and there's a heap of info available online.

Remember, though, that there are a wide range of factors that can influence sale price, from seemingly minor aesthetic details like tile choice, to planning decisions like orientation of windows. Since no two houses are likely to be exactly the same, comparing like-for-like will only ever offer a rough guide to price.

Call the professionals

If you'd like a more precise idea of your home's value, you should consider getting in touch with a professional valuer. Doing so will cost you more than doing your own estimate, but they'll likely be a lot more accurate.

A valuer will conduct their assessment based on a wide range of criteria, including:

  • location,
  • condition of the house,
  • size of the land,
  • number of rooms,
  • quality of fixtures and fittings,
  • development potential, and
  • recent improvements such as renovations or landscaped gardens.

Suncorp Bank will ask prospective borrowers to get a professional valuation of a property before offering final approval of a home loan. This is common requirement for most lenders. This valuation is designed to protect both lender and borrower from paying too much, and will inform the amount that we're willing to lend. After all, we don't want to get stung with a bad deal any more than you do.

Speak to a real estate agent

Since they deal with a lot of property sales, and have access to recent sales figures, real estate agents often have a good idea of what a property may be worth.

There can be a pretty big difference between what a real estate agent will say a property is worth, and the figure a formal valuation will come up with, which is usually more conservative. When dealing with a buyer, agents may inflate the figures to get the best price, and when dealing with a vendor they might make big promises in order to attract their business.

Not all agents use the same methods and some may estimate more conservatively, so it can be helpful to get multiple valuations.

Avoid common property value mistakes 

It’s easy for people to make mistakes when estimating the value of a property, especially real estate newbies. A common error is to compare dissimilar properties. A house that is similar in size, location and quality is a good benchmark—but be careful not to focus on surface-level similarities. Two similarly-sized houses in the same neighbourhood may vary greatly in price if one was constructed from higher quality materials. 

Another common error is to let emotions cloud your judgment. Sellers sometimes have a tendency to overestimate the value of a house they are emotionally attached to (say they grew up there). Keep this in mind when selling, and when dealing with sellers. 

Be as informed as possible

Whether you're buying or selling, arming yourself with as much info as possible is your best strategy for the campaign ahead. Use any or all of the methods above, and feel free to get multiple figures from multiple professionals.

Ultimately, the most important number is the one that someone will actually pay. Try to land on a figure that you consider fair, and don't be afraid to walk away if you think you're being ripped off.

Read more: 

Profile of a Suncorp woman

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The information is intended to be of a general nature only. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries. 

Any advice contained in this document has been prepared without taking into account your particular objectives, financial situation or needs. For that reason, before acting on the advice, you should consider the appropriateness of the advice having regard to your own objectives, financial situation and needs. Where the advice relates to the acquisition, or possible acquisition, of a particular financial product, you should consider the Product Disclosure Statement before making any decision regarding the product. Contact us for a copy.