How To Calculate What Your Home Is Worth

The main question you’re likely to be asking when considering selling is: What is my home worth?

Knowing how to work out the likely selling price of your home and what affects this result will allow you to be more prepared for offers from prospective buyers and to have a knowledgeable conversation with your agent about how to get the most for your home.

It’s also important to keep a close eye on the likely price of your home if you have any plans to refinance your property.

Before attempting to estimate your home’s worth, it’s crucial to remember that the value of your home is the price the market will pay, or “fair market value”. That is, if your home was put up for sale today, what would the best offer be?

To determine what the market is likely to pay, you need to start considering real sales results and local information about your area.

The data

Luckily, much of the information you will need to get an idea of the value of your home is available online in the form of real estate advertisements and local sales results.

Using online listings to see what current listed prices are, and more importantly the latest sales prices, is one of the critical tools in your arsenal. Available for free through real estate listings sites, as well as through local agents’ websites, you can browse this data and take note.

While listings results can be useful, sales results will be the best as these reflect what a buyer has actually paid. Often, this price is different to the advertised price – it can be higher or lower, due either to market competition or a seller’s unrealistic expectations.

When looking through the transactions, you should look for comparable, recent sales. The best information to use to assess your own home would be an identical home next door selling within the past 24 hours.

Of course, this sort of perfect data is not usually available. You should be willing to consider sales data within the past six months, of similar type to your home (same number of bedrooms, similar block size, similar quality) and that is geographically as close as possible within your suburb. For suburbs with few sales, or homes that are unique, the data may not be as rigorous.

Not every property is made equal, so it will be up to you to determine whether you think the home is inferior or superior. Newer homes will sell for more than renovated homes, which will sell for more than unrenovated homes, all other aspects being equal.

What is comparable?

When considering what properties count as comparable, it can be worth looking at a range of recent sales and noting what makes them more or less valuable than your home.

Having a checklist to compare the properties with can be a powerful option. You may wish to consider the following:

  • Block size, slope and orientation
  • Location within the suburb (including access to amenities)
  • Garaging, car spaces
  • House size (internal space)
  • Condition of the building, type of construction
  • Fixtures, fittings and quality
  • Improvements made and any defects

Floorplan

Yet just looking at the data won’t necessarily allow you to determine what counts as comparable. Looking around local homes and attending auctions can give you a better idea of whether they are truly superior to your home.

Very few home sellers will have the time or the means to attend numerous open homes, pay for data and wait for more sales to get an idea of value. At this point, it might just be time to call in the experts.

Expert opinion

It can be hard to judge critically and unemotionally the value of your own home, particularly for those who aren’t real estate experts. Luckily, real estate agents and valuers can provide price estimates, and their reasoning, that can put you in the best position to make an educated choice.

Valuers provide a formal property valuation for your home for a fee, usually around $500, while real estate agent appraisals provide a guide for how to price a home for sale. This service is for free, usually as a precursor to selling and listing your home.

There’s also more of a benefit than just the real estate agent’s training and local experience for those looking to get an expert opinion. They can tell you the interest from specific buyers in the market, the offers that have recently been made and sales results that are not yet available online.

They will have a close understanding of which streets and specific property types command higher prices and any recent changes, such as rezonings, that could affect your value.

Data can also be available through paid services, such as RP Data, Residex and Domain, however these professional services can be expensive for the average home seller. Real estate agents will have access to these portals and can run searches for you.

Obtaining two to three appraisals from real estate agents will allow you to be informed. Ensure you ask for the evidence behind how they are appraising your home, which may include examples of local, recent sales that substantiate their estimate.

A good local agent can also tell you whether you may be able to improve on that price. There may be small renovations, improvements or cosmetic fix ups that you could be doing to secure a higher price for a small outlay, or that may put off buyers and inhibit you achieving your desired outcome.

 

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