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Use the principles discussed as a guideline and work out the value yourself, or go online to Quotable Value New Zealand and get the information of what properties in your area sold for. Find the best possible price range. It is a no-win situation to ask real estate consultants to price properties. If they are eager to get your property to sell, they might be temped give you a higher estimate and then do some “vendor conditioning” to get your price down. I don’t do appraisals. If you want to know the value of your property it is best to get a registered valuation. It is my job to tell buyers why your property is so special (market ing) and to sell your property.
Scarcity
Property value is a complex issue, and revolves around supply and demand. If there’s a scarcity in the market for your type of property, you’re likely to get a higher price. It’s therefore important to know what’s going on in the market and how it can influence the value of your home.
Market Indicators
For real estate consultants and agents, it is always a good time to sell. But is it? In a buoyant real estate market you will get a really good price for your home and you will make a profit. Just remember that if you are going to buy, you’ll be buying in the same upbeat market and your new home is going to have a higher price, and you’re probably going to pay interest on a higher mortgage.
Selling in a down market has some great advantages. You are not getting as much for your home, but if you are going to upgrade to a more expensive home, it will be in the equally lower-priced in the market, and your new mortgage won’t be as high either. You will have substantial savings on interest over a 20 year period as oppose to selling and buying in a red warm market.
Market indicators are more important for people speculating with properties but it is always good to be well informed.
Location
Other factors are the desirability of the location, close proximity to good schools, open areas, views, on the bus routes and close proximity to the city or town.
Design
The exterior or kerb appeal of your home is very important. If it’s a bit bland, pay a professional to help you to make it interesting and inviting.
The house floor plan is very important. Four bedrooms combined with small living areas might appeal to a small minority of buyers, as larger families usually want large living areas. I’ve seen well-presented upmarket homes sitting in the market and not selling because the floor plan is not suitable for 99.9% of the market. If your home has this type of problem, it pays to get professionals to help redesign some of the areas.
Market exposure
At the heart of value is whether your property is adequately exposed to the market. It is proven that when there’s only one buyer, the price is negotiated down, with more buyers the demand is pushing the price up – demand will set the price.
There is a lot of puffery going on about the market exposure your property is going to get when you ask some of the companies to sell your home. It is important to remember not to exclude potential buyers and to make sure that your advertising dollar is well spend.
Doing the sums – market value
Market value is the price a willing buyer will pay for a property today when that property is exposed to the market and when the seller is a willing seller (not forced to sell) and the relationship is that of unrelated people doing a normal business transaction.
Sales comparisons
One of the best ways to work out property value is the sales comparison approach. Buyers use this method all the time. You can do the first steps yourself by finding out the sales in your area www.qv.co.nz/default.htm.
Finding a suitable value is far more than just comparing one three-bedroom home to another one. Landsize and the overall size of the home is also important. The quality of chattels and the practicality of the floorplan could result in higher prices.
Does cost equate to value?
A number of owners use costs to establish value. This could lead to overpricing of the property, as costs are not necessarily value. One example of the principle is a swimming pool as some buyers could see it as a liability.
Replacement value
Another favoured method used by owners is replacement value. This is not a good method to establish value. In 1933 the following statement was made by the Board for Standards of Appraisal Practice and the National Association of Real Estate Boards: “…it is unethical for an appraiser to issue an appraisal report on a property in which the total reported value is derived by adding the market value of the land (or leasehold) as if unimproved to its highest and best use plus the reproduction costs of the improvements, less depreciation.” If it was unethical in 1933 it is even more so today because of the consumer protection legislation.
Replacement value is used only to check the figures derived from the sales comparison approach.
An appraisal
An appraisal is an informal opinion usually expressed by a real estate consultant. Finance companies in New Zealand will not accept a written appraisal as a valuation. A Registered Valuer will on payment prepare and submit a valuation to you.
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