A FREE market appraisal one of the primary tools in real estate for establishing a likely "Market Price" selling range for your home. So, what is it ...and is it worth your time and effort?
Let’s first look at other types of property valuations that you may be familiar with.
Rateable Valuation (RV)
Also known as Capital Value (CV) or Government Valuation (GV), this figure is calculated by the district council using a formula based on the age, size and location of your property and is used primarily to determine what rates you will pay. In most cases the council has not actually inspected your property so no allowance is made for the actual condition of your home or renovations if they have been made. As it is only updated every 3 years, it does not fluctuate to account for current market conditions.
Registered Valuation
If you choose, you may seek the services of a Registered Valuer to do a market valuation of your property. (In some cases this is required; in order to qualify for finance for example.) The cost may typically fall between $400 - $600 for this service. The Registered Valuer is qualified to assess what you property is probably worth in today’s market. They will do a detailed inspection of your property taking measurements, analysing building materials, taking into consideration all aspects of the property that might affect it’s sale price.
So, how do these differ from a FREE Market Appraisal offered by a real estate agent? Most real estate agents are not registered valuers. However, they do have hands on knowledge about current market conditions and access to statistics on recent sales.
The agent will generally visit your property and do a walk through with you making notes on the features and general condition of your home. They will then go back to their office and prepare a CMA.
A CMA (Current Market Analysis) is an industry recognised technique for estimating the likely price that your property might sell for if taken to market in the current conditions. Many factors are taken into consideration when preparing a CMA including the location, size, age and condition of the property.
By comparing your property with similar properties that have recently sold and others that are currently on the market, it is possible to make an informed projection as to what your property might fetch on today’s market.
After preparing the CMA, the agent will meet with you once again to present their pricing recommendation at which time they will usually include information on their marketing programmes.
To summarize, a FREE Market Appraisal can be a great way to get a feel for the market value of your property without obligation or having to pay for a registered valuation however, there is something you should watch out for.
In an effort to win your approval and perhaps even your business, it is not unheard of for some agents to over inflate the value of your property. You can avoid this pitfall simply by asking the agent to show you the data they used to arrive at their valuation. By viewing the statistical data on comparable homes in the area (some probably from your own street that you may be more familiar with than the agent!) you can easily draw your own conclusions.
Having said all this, it is important to appreciate that the property market is no different to any other commercial market, it responds to supply and demand. In reality, it is not the real estate professional or even a registered valuer that puts a price on your home … it is the market itself!