Before you get ready to sell your home or investment property, you may want to work out what kind of sale price you can expect. Whether you’re planning to use the money from the sale to fund your next property purchase, or if you have some other project in mind, appraising your property’s value before you sell can help you start planning your budget in advance.
A property appraisal from a real estate agent can quickly give you a better idea of your home’s potential sale price. By knowing some of the factors that could affect your property value, you may be able to make a few small changes that could make a big difference to your bottom line.
Is an appraisal the same as a valuation?
A property appraisal from a real estate agent is different to a property valuation conducted as part of a mortgage application. An appraisal is an estimate of how much a property could sell for at auction or privately, while a valuation is an assessment of whether a mortgage could be secured using the property’s value.
Real estate agents and valuers take different factors into account when making their assessments. Generally, a valuer is more likely to stick to just the facts regarding a property (e.g. property size, number of bedrooms, recent sales in the area etc.), while an agent’s appraisal may also consider some less concrete factors, such as the property’s appeal to buyers.
What factors affect property value?
Some of the factors that could affect the value of residential property when an agent conducts an appraisal include:
- Location, location, location: As per this old real estate saying, whether you’re planning to live in a property as an owner occupier, or rent it out as an investor, the property’s distance from public transport, shops, schools, parks, and other amenities can make a massive difference to its value.
- Size: Bigger properties (including land size) tend to be more valuable than similar smaller properties, as they offer more living space and/or greater scope to renovate or develop the property.
- Usable spaces: The more bedrooms, bathrooms, car spaces and so on that a property has available, the more use (and value) it may offer to owners or tenants.
- Age and condition: Older properties have often stood the test of time, which can increase their value, though they’re more likely to require extra maintenance, especially if they’re old enough to have heritage considerations. Newer properties are more likely to be in pristine condition, though their value may not yet be firmly established.
- Presentation: Small updates to a property’s look and feel can help buyers see the value it offers. This could be a fresh coat of paint, or new fixtures and fittings. Even just cleaning the windows and decluttering the space can help a buyer better appreciate a property at an inspection.
- Kitchens and bathrooms: These rooms see a lot of use, and require more time, effort and expense to renovate or repair than most other rooms of a home. A well-presented and functional kitchen and bathroom, with reliable and high quality appliances, can make a big difference to a property’s value.
- Storage space: Cupboards, built-in wardrobes, attics and basements that are easily accessible and efficiently laid out can help owners and tenants manage and organise their possessions, which can be very valuable to the right buyer.
- Garden and landscaping: A well maintained garden and neat, well-presented exterior can give people a good impression of the property before they walk through the front door.
- Recent sales: The sale prices of similar properties in the local area can help to indicate what a buyer may be willing to pay for your own property.
- Future potential: Sometimes an average property’s potential for renovation, redevelopment or other improvements can make it more valuable to a buyer than you may expect.
- Energy efficiency: According to the CSIRO and Nationwide House Energy Rating Scheme (as cited by CommBank), adding energy-efficient features to a home can reduce power bills by as much as $500 per year. With this in mind, adding solar panels and similar green technologies to a property could potentially affect its value.
- Interest rates: It’s usually a good idea to compare home loan interest rates when you’re shopping for a mortgage, but did you know that they could potentially affect your home’s sale price? When rates are low, it may be possible for buyers to borrow more money to purchase property, which could in turn push up average property prices in some areas.
Beware of overcapitalising
If you’re renovating or otherwise updating your property with the goal of improving its potential sale value, it’s possible to go too far and overcapitalise. This is where you spend more on upgrading a property than you’ll likely make back for a raised sale price.
Where can I get a value estimate?
To help you get started estimating your property’s value, consider downloading a free property report from RateCity. This report uses available data on your property to provide a value estimate.
If you compare your property to similar properties that have recently sold in your area, you may be able to further refine your own property value estimate before you contact a real estate agent for an appraisal.