Different ways you should be valuing property.


When you are asked an agent to give someone an appraisal on their home, you may have a standard formula or process that you undertake in order to get to the conclusion of how much it is worth. This could include looking at comparative sales, studying the housing growth charts etc. but today we represent different prices that a house can be valued for, and which one you should be pushing for in winning the listing and also closing the sale.

1. Market Value

The Market value can simply be understood as this. How much is someone going to pay for the home to buy it today. It is where a buyer is motivated strongly to buy and the seller is motivated strongly to sell. The market value generally lands at a price point in between the maximum the buyer will pay and the minimum the seller will sell. Market value really only gets predicted on auction day so it can be hard to anticipate. There is a strong emotional value that comes in to this, and people can pay well above and beyond the supposed true value of the home due to having a strong want for it.

2. Appraised Value

When trying to put a price on a property, the appraised value can be a good way to do it. A licensed appraiser takes in to account all elements of the property, including the location, features and benefits. It's important to note that this is not the market value, just because there is an inherent value given to the property, it doesn't take in to fact emotional buyers and the eb and flow of a market so much as market value. Therefore the appraised value can sometimes be well below or above the bidding at an auction. 

3. Value of use

Some homes are well above their supposed value due to the offerings that they provide. If a home has been approved for a tennis court, and the family looking to buy the home is very athletic and want a tennis court in their home, the implied value of the home has increased as it fulfils a need in regards to what it is that they want. Whilst the standard consumer may just calculate it on land size, there are specific markets you can pitch to, where you demonstrate that it is worth of more value to them that just the land price because it fulfils a need they otherwise would not address. 

If the home is on a large lot of land where a lot of development has been taking place and the house is very average, then the value is purely in the redevelopment potential and being able to flip the property, therefore you would calculate the value on the land cost, and not bother mentioning the house. 

4. Assessed Value

This is a more formal valuation of a house and done more so for taxation purposes rather than anything else. Here, the appraiser values the home to ascertain how much property tax should be paid to the local council. This value takes into account the overall quality of the property, property values and market conditions of the surrounding areas. This is a much more factual appraisal and not emotional at all. 

So as an agent you can undertake multiple valuation techniques. It may be beneficial to undertake certain valuation methods over others, but either way, it is important to explain to the vendor how you got to that appraised value and what it means for them. The way you value the home can also have an effect on the asking price, as if you ask the agent to value it on 'Value of use' you may find premiums are added because of the 'potential'

Either way, all prices should fall within the vicinity of each other and should be accurate in demonstrating what the value of the home is and how much it is worth on the market. 

About the Authors:

Todd Schulberg

Todd Schulberg handles all things marketing for Homely.com.au - Living and breathing property, Todd has a keen interest in the movements in the market and how agents can utilise new tools and technology in order to be more connected. Using all things social, Todd suggests different ways that agents can engage and think outside the square with their marketing approach. 

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Rocky Bartolotto

Rocky Bartolotto is the National Sales Director for Homely.com.au - Rocky's extensive experience in introducing new product offerings to the market and client management abilities makes him one of the most knowledgeable property specialists in the country. 

In addition to his time working in the online space, Bartolotto is also one of Sydney’s top auctioneers, with over 4000 auctions performed through his business Auction Services.

is the National Sales Director for Homely.com.au - Rocky's extensive experience in introducing new product offerings to the market and client management abilities makes him one of the most knowledgeable property specialists in the country. 

In addition to his time working in the online space, Bartolotto is also one of Sydney’s top auctioneers, with over 4000 auctions performed through his business Auction Services.

rocky round.png

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