How to Value a Property: A Guide for Buyers, Sellers, and Investors
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Ever wondered how to put a price tag on a property? Whether you’re selling, refinancing, or buying, understanding how properties are valued is crucial. It’s not just about guesswork or what your neighbour’s house sold for - there’s a method to the madness! So, let’s break it down and make property valuation less of a mystery and more of a superpower.
Comparative Market Analysis (CMA) - Your Property’s Dopplegänger Test
CMA is a fancy way of saying, "Let’s compare apples to apples." Here’s how you do it right:
Land size, layout, and topography - A sprawling lot with a gentle slope? Jackpot. A shoebox squeezed between two industrial blocks? Not so much.
Property configuration - More bedrooms and bathrooms generally mean more $$$. But a weirdly shaped five-bedroom home with no living space? Not so much.
Renovation - A fresh coat of paint and a modern kitchen can work wonders. An outdated avocado-green bathroom? Not so much.
Wall structure - Brick veneer on concrete slab? Solid. Fibro shack on wobbly timber stumps? Less so.
Recency of sales data - The more recent, the better. Ideally, within the last three months - because property prices can move faster than a runaway auctioneer.
Market trends - Is the market surging, stagnating, or sinking? Factor that in.
Sold price visibility - In some areas, it can take up to three months for the final sale price to show up. Factor in how the market is going during that time.
Number of comparables - Look at at least five properties - some better, some worse, and some eerily similar.
Other Factors Impacting Property Valuation
Valuation isn’t just about a home’s square meterage. Other factors can make or break the price:
Exact location - Close to good schools? Cha-ching! Backing onto a freeway? Less appealing.
Land shape - Regular blocks are preferable; odd shapes (think diamond shaped blocks) may struggle.
Days on Market (DoM) and off-market context - A property sitting on the market for months might have an unrealistic price tag, or there could be underlying issues. It could also be a home needing a cosmetic facelift - great for bargain hunters, but not always an easy sell.
Views and elevation - A hilltop home with sweeping views? Yes, please. A house sitting in a ditch? Probably not premium-priced.
Nearby negatives – High-voltage powerlines, cemeteries, landfills - these are not real estate gold.
Natural hazards - Flood zones, bushfire risk, cyclone-prone areas - these can impact insurance and desirability.
Council restrictions and zoning - Can you develop or subdivide? The answer could change the value significantly.
Common Mistakes in Property Valuation
Avoid these pitfalls, or you might end up with an overinflated (or underwhelming) valuation:
Blindly trusting automated valuation tools - RP Data, realestate.com.au, and Domain are helpful but should be used as a guide, not gospel.
Comparing with properties currently on sale - Listings show asking prices, not what buyers are actually willing to pay.
Comparing apples with oranges - A 10-year-old brick home isn’t the same as a 40-year-old fibro cottage. Let’s be real.
Thinking bank valuations are the gospel truth - Banks play it safe. Have you ever underpaid for a house and then had the bank value it higher? Didn’t think so. They won’t put themselves at risk by inflating values.
How to Maximise Property Value Before Selling
If you’re thinking of selling, a few smart tweaks can give your home a serious value boost. Here’s how:
Mini makeover - Make your home look move-in ready. No one wants to buy a project unless it’s a bargain.
Fresh paint, new carpets, and updated blinds - These simple upgrades can transform a home.
Modernise fixtures - Update cabinetry, handles, light fittings, and tapware for a contemporary look.
Boost curb appeal - A bit of landscaping and a fresh front door can make a massive difference.
Professional staging - Ever noticed how a well-placed single bed makes a tiny room look bigger? Staging pros know all the tricks.
Final Thoughts
Valuing a property is part science, part art, and a little bit of common sense. Whether you’re buying, selling, or refinancing, taking a measured approach will help you make informed decisions - and maybe even get the best deal on your next property adventure. Happy house hunting!
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The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any individual objectives, financial situation or needs. Before acting on this information, Premier Buyers recommends that you consider whether it is appropriate for your circumstances and engage qualified professionals.