How do you value property?

Hey guys,

Given that with tools such a pricefinder and RP data all the past sale and attribute information is available for entire suburbs, how can one use this data to determine the market value of potential purchases? For a lot of areas there seems to be an inconsistency or seeming lack of pattern or logical progression in the past sales history. What are the most important parts of past sale information you guys look at?

I would've though it would be:
1. Sale price and date
2. Locality in the suburb
3. Area
4. Quality and attributes of dwelling

Is there anything else I'm missing? What do you have to know specifically about each of these attributes and how does the thought process work to formulate a figure. For example I'm looking a list of data as follows and there doesn't seem to be any sense in the price:

Property A: $205,000, 718sqm, 3bedder
Property B: $285,000, 728sqm, 3bedder
Property C: $290,000, 810sqm, 3bedder
Property D: $280,000, 800sqm, 3bedder
Property E: $260,000, 615sqm, 3bedder
Property F: $295,000, 582sqm, 3bedder

All within the same few streets, all in similar condition and sold within a few months of each other.
 
If they are all in similar condition and sold within few months,
Property A was bought by a savvy investor (probably someone here at SS) and Property F was bought by an emotional buyer (may be a first home buyer)

Property A could be a mortgagee sale or sold by an out of area agent or needed substantial renovation. It is even possible that it is a related party sale.
 
I am not a valuer, so I can only describe how I come up with a more accurate price estimate.

First, take a stack of comparable sales in the area within a relatively short period of time, and export the data to excel.
You need to hold as many things constant as you can, so make sure you have number of bedrooms, number of bathrooms, number of living areas and LUGs as the same.
Then clean and sort the data, remove extremities and anomalies, then graph it to get an idea of the range (Or graph it first then remove extremities and anomalies).
To work out where a property might sit within the range, you also need to consider
  • the age of the property
  • floor area
  • side of the street
  • proximity to housing commission
  • school enrolment zones
  • pool or no pool
  • landscaping
  • side access
  • shape of the block
  • land zoning
  • quality of build / builder
  • quality of fittings and fixtures
  • whether or not it has been renovated
  • issues e.g. termites, settlement cracks, roofing etc, and the cost to remedy them
  • body corp issues
  • legal issues
  • number of days on the market
  • vendor motivation

You can also triangulate information obtained from a number of different methods and sources to work out a price estimate. E.g. RP Data, Onthehouse, reverse yield calculation, average discounting, land value plus build calc, etc.

Cheers

Jen
 
Also you may need to be familiar with the LEP to confirm is blocks over a certain size have the ability to be subdivided, or may have restrictions not apparent eg restriction on two adjacent blocks being developed for villas (ie 20 m separation between blocks) - a higher price may be paid for one of these blocks as compared to the one two away from a development.
 
Back
Top