Type your address into any number of free ‘what’s your home worth’ websites and an approximation of your home’s market value pops onto the screen in the blink of an eye. Easy.
But no matter whether the figure you see sends your heart soaring – or sinking – take a minute to consider how accurate that value could be. What about the bathroom upgrade? The new kitchen? The barbecue area? All that money has to account for something.
Unlike other assets like your super, your home doesn’t come with an annual statement that shows what the place is worth at any point in time. But there are times – like when you want to refinance your home loan, that it can be extremely helpful to have a reasonable idea of your property’s market value.
There is a range of valuation options to choose from beyond the freebie websites. Each offers varying degrees of accuracy, and as is often the case, you get what you pay for.
A market appraisal
One cost-free option is to have your home assessed by a local real estate agent. This gives you the benefit of a local expert walking through the property in person. The downside is that a market appraisal is not the same as a formal valuation, and the final figure could be bumped up if the agent thinks a listing could be gained.
Automated valuation models
Further along the scale are ‘automated valuation models’. These are a user-pays service usually provided by property research companies. For a small fee, you provide your address, and a value for your home is computer generated based on recent sales figures in your neighbourhood.
It’s a budget-friendly option, although the figure you end up with is based on a wide number of previous sales – and the homes sold may be nothing like your own.
If you’re willing to pay a bit more, a desktop assessment or ‘electronic valuer review’ can crank up the accuracy factor.
An estimate of your home’s value will be provided by a property research firm based on recent local sales data backed by either a current photograph of your home or a phone discussion between you and a valuer.
This type of valuation lets you provide more detail about your home but without a physical inspection of the place the valuation is far from watertight.
Go pro – call a registered valuer
If you’re looking for a rock solid estimate of your home’s value, the most accurate (and costly) option is to have your home checked inside and out by a registered property valuer.
These guys are experts, and the valuation you receive is based on local sales results combined with an analysis of current market conditions, reviews of any proposed council developments in your area and of course the quality of your home (so it’s worth giving the place a spruce up before the valuer arrives).
The figure you will end up with is an estimate of what a willing buyer would pay for the property on the day of the valuation. Sounds fair.
Do you really need to pay for a valuation at all?
You can expect to pay upwards of a few hundred dollars for a formal valuation of your place. But here’s the thing. While it is always interesting to know, or at least have a reasonable idea, of your home’s value, you do not need to pay for a valuation at all!
If you are looking at buying your next property, we can provide you with an expert prepared valuation, based on the comparable sales in a defined immediate area (or even the same building if we are looking at an apartment) as well as current market specific conditions for the suburb. It’s also good to know the age of the property and how long it has been on the market. All good to know information to help when negotiating on a purchase price. Give me a call if you’re thinking about purchasing a property and I can give you a few more tips!
On the other hand, if you do decide to refinance or top up your existing home loan, it’s more than likely that the lender will conduct an independent valuation of their own.
The bottom line is that it’s always interesting to know what your patch of turf is worth…and equally important, what you can do with the equity!
If you would like us to provide you with a Property Report for your existing home or potential purchase, please feel free to call us on 02 8004 2222 or book a time to chat with George.
PS This article is prepared based on general information. It does not take into account individual financial or property objectives or needs and is not financial product or investment advice.