Knowing the actual value of your property is crucial when selling or refinancing your home loan and you can gain this information through a real estate appraisal.
What Is An Appraisal?
A property appraisal is an estimate of property value relative to the current real estate market. ‘How much is my home worth?’ is a question that real estate agents are asked commonly, and having a property appraised is the most accurate way to answer this query. Through comparative market analysis, recent sales data of comparable properties in the local area, over the last 90 days is compared. Additional factors such as market competition, broader market trends, property structure and overall condition impact the valuation of a property. An accurate appraisals is an outstanding way to understand a property’s worth on the market at a particular point in time.
What Is The Purpose Of An Appraisal?
When listing your property for sale, it is a good idea to get an assessment of its estimated value before putting it on the market. You can find a rough estimate of your property’s value through a free property appraisal from an experienced real estate agent. Alternatively, if you are chasing a definitive value for your home, a professional, qualified valuer can provide a property valuation for a fee.
Generally speaking, your real estate agent conducts your property appraisal based on future prospects due to your likelihood of listing your property at least a month after the appraisal takes place. This allows the agent to consider real estate trends including the direction of market prices in the current climate when estimating a value. The agent will also be able to tell you roughly how long your property will take to sell based on current market conditions and recent property transactions.
What Factors Are Appraisals Based On?
Based on a thorough inspection of your property, most real estate agencies can conduct a sales appraisal to estimate the value of your home with respect to the current market. To reach their appraised value, a number of factors are generally considered including:
Property Size
When conducting the property appraisal process, the real estate agent will consider the size of the overall block, the size of the structures on the land, as well as the size of relevant areas within the property – such as the living area or main bedroom. These measurements will be weighed up and compared against other properties of similar size within the area.
In relation to property size, the real estate agent will also consider outdoor areas on the premises, such as parking areas, carports or lock-up garages, size of gardens, backyards and terraces or balconies.
Location
An extremely important factor for the appraisal of a property is the location in which it is in. When examining the location of a home, the agent will consider not only the street, but nearby attractions in the neighbourhood, school catchment areas, available local amenities, such as shopping centres, and accessible public transportation routes nearby. However, just because your property isn’t necessarily in the immediate vicinity of these things, doesn’t mean it won’t attract a desirable selling price. Quiet streets and relaxed areas are just as pleasant for the right local buyers.
Building Structure & Condition
The structural integrity and overall condition of the property are crucial to improving an agent’s appraisal value. Any smart potential buyer will request a building report, which outlines any potential issues with the structures on the land, as well as estimated costs of structural work to correct these issues. Your appraisal price will be directly related to the quality of the build of your home, meaning your property doesn’t need to be fancy or extremely modern, but the better workmanship that has gone into it, the higher the real estate agencies offer on price is likely to be.
Market Conditions & Recent Local Sales
The condition of the property market will generally dictate what your appraised value will be. Your real estate agent will analyse recent sales in the area, suburb insights, as well as overall market trends to gain an understanding of what price to give you as a guide. While the market is used as a solid indicator for purchase price, it is not a definitive guide – a prospective buyer could walk through your front door and fall in love right away.
Number Of Bedrooms
Bedrooms are a key consideration when conducting a sales appraisal. Generally, the more bedrooms within a property, the higher the property’s valuation will be. The agent will consider a number of factors about the bedrooms in the property, including the size of the bedrooms, whether an ensuite is connected, potential views and the presence of built in wardrobes. Recently sold properties in the area with similar specifications to yours will be considered during the appraisal process.
Fixtures & Fittings
Fixtures and fittings, such as curtains or light fittings for example, are not always included in the sale price of the property. When analysing a property for a market valuation, the real estate agent will need to consider whether the fittings and fixtures will be included in the sale price, and if so the overall condition they are in. This may seem like a minor factor to consider, however a potential buyer needing to fix a range of things may push the offered price down.
Planning & Restrictions
When selling a property, sometimes you are also selling the potential of the home or block. When appraising a property, a real estate agent will look at what other vendors have done in the area and will also analyse any restrictions in the neighbourhood or on your particular block. Local council zoning can impact what a prospective buyer can or can’t do in terms of building on the block, and if numerous restrictions are in place, then people may be put off.
What’s The Difference Between An Appraisal And A Valuation?
It’s important to understand what your property is worth. It’s also important to understand the difference between a valuation and an appraisal.
Property Appraisals
A property appraisal is an educated judgement on the value of your home, generally conducted by a local real estate agent. The agent will examine all sales data from the area, including from other agencies, providing you with a unique insight into the local market. The agent will provide you with a figure based on the market conditions, as well as the features and conditions of your property.
Property Valuations
A property valuation is performed by a certified practicing valuer for an agreed fee. These valuers are not real estate agents and have no association or involvement with any real estate agency. Generally speaking, valuers will utilise one of three methods – direct comparison, summation or capitalisation – to determine the true value of your property. Valuers will inspect the property, research and analyse the local market and provide a detailed report on any issues affecting the property’s market value.
Property valuation services are commonly required by financial institutions or banks prior to approving home loans, used by buyers and sellers wanting an independent opinion before purchase, in family or partnership settlements, capital gains tax and in some cases for building insurance.
What Is A Rental Appraisal?
A rental appraisal helps to detail the amount of rent an investment property would be able to generate based on the market climate. The rental appraisal document outlines valuable information such as current market trends, conditions and the rent yields of similar properties in the area and surrounding suburbs.
A property manager is able to conduct a rental appraisal of your property, which is an important step when planning to lease. Rental appraisals give you a better understanding of how to market your property, the demographics you could target and recommended rent charges.
Rental appraisals also prove as valuable documents for people considering purchasing additional investment properties, gaining insights into the possible potential returns of a property. The appraisal could assist in assessing the purchase without seeking a loan. By knowing the potential rental income of a property, this can aid in determining the affordability of making repayments.
The Wellington & Reeves Appraisal Process
Appraisal Factors
We take into account a range of factors to do with your property, which helps to ensure we provide you with an accurate picture of the worth of your home. Considerations include:
- Direct market comparisons of your property with similar properties currently for sale, and those sold recently in the same area
- Assessment on the impact of key marketing factors including location, size and property condition
- Prevailing market trends such as current levels of supply and demand
Property Marketing Package
We have developed a marketing package to ensure the exposure of your property is maximised. Marketing package including:
- ‘For Sale’ sign placement in the most prominent position on the property
- Photographs of the property to be displayed in the Wellington & Reeves office window
- Creation of advertisements in selected local newspapers (Albany Advertiser & the Extra)
- Preparation of a property profile brochure to be distributed to enquirers, alternative local agents and surrounding properties
- Qualified potential buyers to be shown through the property at mutually convenient times
- Arrangement of home opens / property inspections on weekends
- Creation and distribution of effective digital advertisements for placement on various relevant websites
If you are looking to list your home on the market then look no further than the team at Wellington & Reeves, who have been helping Albany & the Great Southern with all their real estate needs for over 70 years. Get in touch with us today!
