When it comes to selling your property, there’s power in having a clear idea of its market value.
They say knowledge is power, and never is this truer than when it comes to buying and selling property. If you’re considering putting your home or investment property on the market, the most powerful piece of knowledge you can have is how much it’s likely to fetch.
Ultimately, your little slice of paradise is worth what a buyer is prepared to pay for it – and what you will agree to sell it for. Understanding your side of this equation will help to inform your decision-making, enable you to tailor your sales strategy, and strengthen your position as a vendor. It all comes down to having an accurate idea of what your property is worth in the current market.
Fail to arm yourself with this knowledge, and you could end up disadvantaging yourself with the value expectations you take to the market – particularly if you are trying to sell through methods like sale by negotiation or advertised price, but also when setting a reserve at auction.
Over-price the property, and you will stifle interest from the outset and rob yourself of impact at the start of a marketing campaign. The much bigger danger, though, is that you under-price the property. Once you set a price, you have immediately capped what you could achieve for it, and risk selling it too cheaply, even if a buyer had initially seen its value as north of that level.
But with so much, often conflicting, information from so many sources how can you be sure the price you’re seeking is on the mark?
It’s impossible to overstate the importance of doing your homework and, if necessary, bringing in the experts.
The key lies in stripping out the emotion and taking a cold, hard look at your piece of real estate and what local homes like it are selling for.
RV (rating valuation)
Sometimes also referred to as CV (council valuation) or GV (Government Valuation), and revised every three years, the RV is an estimated value your local authority puts on your property to determine how much you should pay in rates.
Based on mass appraisals and computer-generated estimates, without site visits, these estimates take into account any known consented work, subdivision or zoning changes, but not chattels or any improvements that didn’t require consents. As RVs are sight-unseen, they often don’t take into account other influential factors such as views, condition, or water and other types of damage.
As such, they cannot be relied on as an accurate indicator of current market value – particularly as time passes since the last three-yearly estimate.
Market chatter sometimes gives rise to broad ‘rules of thumb’ that homes in an area are selling for a certain percentage above RV. Treat these with a healthy dose of caution because, like the RVs themselves, they take no account of a home’s unique characteristics, improvements or selling points.
Comparing recent sales
There is a lot of publicly available information you can draw on to make comparisons with other properties sold in the local area. But make sure you’re looking at recent sales and comparing apples with apples – meaning homes of a similar condition, number of bedrooms/bathrooms, floorspace, land area and title category.
Try to keep comparisons within a radius of a few blocks if possible, being conscious of any boundaries such as school zones, suburb limits or major roads across which values are known to differ.
Websites such as Homes.co.nz or Trade Me can do much of the work for you, instantly crunching comparable local data to give you a general guide to market value – though their accuracy may be impacted if there are not enough comparable sales, or where unique characteristics like unrivalled views or heritage status make a property too unique for reliable comparison.
If possible, supplement any online research with a physical walk-by to see first-hand the condition or unique features of recently-sold homes.
A current market appraisal by a licensed real estate agent, based on a visit to your home, will provide you with an expert, up-to-date assessment of your property’s unique and influential factors, such as views, overall condition and any damage, as well as any unique value-adding architecture, design or landscaping features.
The agent will use their detailed local knowledge of the area to compare your property with similar dwellings that have sold recently, mentally compensating for any features which differ. This type of appraisal is normally carried out on a free, no-obligation basis and can help you hone in on the range of prices your property could fetch in the current market.
Full market valuation
Some vendors will opt to pay for a full valuation from a registered property valuer. The price will depend on the level of detail, but is typically $500-$800 for a valuation based on a full inspection of your home and comparable sales in the area.
The valuer will inspect the house inside and out, looking at all physical elements including floors, walls, roof, gardens and fencing, rating the condition and any maintenance or repair issues – as well as factors like ventilation, insulation and lighting, special design elements and street appeal.
Property valuers can also give you an estimate of the value that planned renovations could add to your home.
This type of valuation is considered the most authoritative and impartial gauge of a home’s worth, and is often called on for purposes such as splitting up property in a divorce or when settling a deceased person’s estate. Most banks will require a buyer to get a property valuation by a registered valuer as part of approving a home loan.
While the value you can achieve is largely determined by your property’s basic physical specifications and what’s happening in the local market, it’s not all down to factors beyond your control. There’s plenty you can do to boost the appeal of your property – and therefore its ability to fetch the best price – by making sure it’s looking its best when you come to sell.
Think carefully about whether you will get your money back on a big makeover of kitchens or bathrooms. But a little effort in tidying, painting and smartening up a home and section can make a material difference to what a buyer will offer.
If you have the option of being flexible about timing, this too can work in your favour. Warmth and sunshine, and a flourishing garden, will add to the appeal – and sale price – if you put your home on the market in the sunnier months, particularly if it gets little sun over winter.
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