What is the best way to judge the value of your property?: David Airey
When it comes to judging a property to get a reasonable indication of its value and probable sale price there are three options you might consider.
First, a real estate agent can give an appraisal which is largely an educated guess based on their current sales experience and local knowledge. This is informal but usually pretty helpful as an indication.
Second, an owner or buyer can hire a professional valuer to produce a more formal and authoritative report. These reports are based on sales information held at Landgate and from information obtained from real estate agents on recent sales not yet reflected in the government data. Usually these are the reports which banks and legal bodies will accept as valid for lending and legal purposes.
A professional valuation removes any perception that there might be a bias on the part of real estate agent appraising a property and is regarded as more independent.
Thirdly, the option to pay for a property report from one of the many private companies which are not valuers. However, people thinking of doing this should be aware there can be limitations to this.
Most of the companies which provide this service are based on the east coast of Australia and have few or no staff here.
This means that the reports are largely put together based on Landgate data showing the last sale price and then calibrated to place the property in the context of the current market.
While that might sound quite reasonable, such reports can only be based on the unimproved value of the property since its last transaction.
For example, if a property was purchased in 2005 and the owner demolished the old house and built a bigger one in its place, then this would not be known by a property group based in Sydney or Melbourne.
They would only know of the 2005 sale price, even though the site now has a completely different value. It’s a similar situation if an owner puts in a pool, adds a second story or patio, or maybe constructs a lock-up garage.
These things are not readily detectable through an arms-length report based on data rather than being produced by actually sighting the property and being familiar with its history.
If you solicit a property report from a company that deals in real estate data, make sure it can measure the current improved value of the property and not rely simply on historical sales information.
Better still, engage a local valuer if you need a formal, legal valuation or contact a REIWA agent for an appraisal if that’s all you require.
Either way, it pays to use the local services of those who know your neighbourhood.
David Airey is president of the Real Estate Institute of Western Australia. This article was originally published on reiwa.com.