How to establish a property’s true value
27 November 2017
Adrian Ballantyne via realestate.com.au
With the real estate market continuing to roll from strength to strength, trying to determine a property’s true value is an ever-present challenge for buyers.
Snaring the property you want while avoiding paying too much is the dream, but how do you make that happen? As a buyer, how do you ensure you purchase at the right price every time?
Some of Melbourne’s leading buyer’s agents share their tips.
Buyers need to know what a property is really worth. Picture: Getty
Know your goals
The “right” price for a particular property won’t be the same for everyone.
For example, a first-home buyer might see a certain price as fair for a property, while an older couple looking at downsizing might be perfectly comfortable paying $100,000 more to ensure they get hold of it.
Kristen Hatt, from buyer’s advocates Woledge Hatt, says being crystal clear about what you want from a property will help determine what your right price is.
“It’s about having a really good understanding of what you’re trying to achieve, and then making sure that property will meet all of those goals, because then you can make decisions around price as well,” she says.
“Understanding what the property is and the likelihood of (a similar property becoming available again), will determine the right price for you.”
How to negotiate a property price:
Research, research, research
When it comes to determining the right price for a property, there’s no substitute for market knowledge and conducting your own research.
Luke Assigal, from Parley Property Advisory, says it’s important to frame your own market, rather than blindly following the selling agents and their indicative price ranges.
Inspect in person
All property knowledge isn’t necessarily equal. While looking at properties and results online will give you some measure of knowledge, there’s no substitute for checking out properties in the flesh, Hatt says.
“Just getting the results of properties doesn’t necessarily tell you about the properties,” she says.
“Sometimes a property sells for a certain price because it has a major structural issue, and you can say: ‘Well that’s why it was cheap’. Understanding more about each property is important.”
Home tips for buyers:
Calculate based on square metres
Some agents are reporting that for many properties, calculating the likely sale price based on the rate per sqm of land is proving increasingly accurate.
Again, it’s about research. If a number of properties nearby have sold for around $5000 per sqm often you can expect a very similar rate for the house you’re eyeing off.
“You can do square meterage, particularly when you’re dealing with larger blocks and development blocks in blue chip areas,” Assigal says.
“You can get access to stats quite easily – most properties have the square meterage listed online.”
It doesn’t necessarily mean the property will be the right price for you, but at least you’ll know how much you’re likely to be up for if you decide to bid.
Use a buyer’s advocate
Studying the market yourself each week is one thing, but consider for a moment that there are people who do it professionally.
While the average punter researches properties only when they’re actively looking to buy one, buyer’s advocates/agents have knowledge and expertise built up over many years, and can give an almost instant appraisal of what a property should be worth.
Hatt says that with buyer’s advocates, you’re paying for that superior market knowledge, as well as their ability to sniff out properties based on your personal requirements and circumstances.
“We were chatting to clients the other day and talking about a specific bayside area, and I said that over the last five to 10 years I would have been through 80% of the homes in that area that have been for sale over $1 million,” she says.
“That’s knowledge that you can’t just get by going to a few open for inspections and thinking that you’ve got an understanding. A lot of buyers are only in and out of the market in a very short period of time.”