Property Value Coffee (720 x 480)

How Is Your Property Valued?

The question is frequently asked, “What is my house worth?”

The answer can be wide and varied and can be made as complex as scientific computer based algorithms.

In reality, the value of your property is simply what someone is prepared to pay to buy it from you!

This may sound like a vacuous assessment, however when all the trawling through computer software and other data is done, the fact remains that the buyer who writes the cheque ultimately determines the price.

Market appraisals and valuations are carried out by a number of different parties for various reasons including real estate agents, valuers, banks, Councils, Valuer General and Courts.

All of these parties have a different agenda in regards to determining a value or sale price estimate of your property. Some may seek to find a low figure whilst others may be looking for a higher value.

The commonality, is the fundamentals used to arrive at their conclusions, including;-

  • Supply & Demand
  • Macro-Economic & Global Market Conditions
  • Local & Regional market forces
  • State & Local Government Policy & Projections
  • Property Zoning
  • Property Size, Configuration, Location, Condition
  • Comparable recent sale prices
  • Current comparable properties for sale

Real Estate Agents will conduct a market appraisal to establish a recommended selling price or price range for your home. Commonly used subscription based software such as Corelogic RP Data and Pricefinder are used.

Valuers will conduct far more in-depth analysis using the same fundamental data, and will produce a detailed written document with supporting evidence of the information that the valuation relies upon.

Formal valuations from registered valuers are called for by banks and other financial and legal institutions to validate and comply with lending criteria and meet legal obligations for distribution of monies from court ordered property disposals flowing from deceased estates, divorces and mortgagee in possession auctions as a result of default on mortgage payments.

The Valuer General will establish its own property values from which council rates and land tax is levied. These property values can be challenged by property owners if you believe the value is too high. However, the onus on substantiating any error in determining the valuation relies upon you.

In regards to getting an idea of the value of your home, caution should be exercised when using free on-line house price tools.

These programs rely on unqualified information and can be very misleading in their results.

As humans we are inherently inclined to believe our home is worth more than it really is.

This is known as the “Emotional Price”.

The “Emotional Price” is equal to the value of the property plus the BST factor. This is the Blood Sweat & Tears factor.

Here I am not talking about the late 1960’s American Jazz Rock Band but rather the Blood Sweat & Tears (and cash) that you have put into your home to make it what you have wanted it to be.

This emotional price rarely, if ever, equates to the “Logical Price” that someone will pay you to take over your property.

If your serious about selling your home or property, be realistic, for in the alternative you will remain the owner of your own property for some time, possibly much further into the future!

Drew Oliver

Regional & Rural Realty