What is the true market value of my house?
Category 3%.Com Properties
Introduction
Before putting your property on the market for sale, it is important to determine a fair market related value of your property. The several advantages associated to listing your property at the correct price from the start are:
- A better response to advertisements.
- You will attract serious buyers who are often pre-qualified.
- Less chance of ridiculously low offers.
- Less risk of overexposing the property.
- The seller will achieve the best price in the shortest time and at the least inconvenience to both the seller and the property practitioner.
In this article, we will unpack the factors that determine what your property is worth, the tools to valuate your property and their differences, as well as a free bank valuation service from our strategic partner - FNB.
Factors that determine the property worth
A true market value or a fair market value of a property means a price that the buyer is willing to pay, and the seller is willing to accept. The true value of a property is not determined by the seller or the property practitioner for that matter. Property practitioners do not control market prices, and sellers can only offer an opinion. Ultimately, it is the buyer who determines market values.
Your property value is determined by the following factors:
1. Location
Location is the first factor that will be taken into consideration to determine the value of your property. The value is directly linked to what is surrounding that property in that specific location for example restaurants, schools, shopping malls, the type of neighbourhood, crime in the area, and highways etc.
2. Size and Condition
The size of properties are measured according to squared meters and it is generally said that larger properties, will cost more. However, the condition of the properties needs to be well looked after too. If the house has been renovated, you have a fair chance of that increasing the value.
3. Number of Rooms and Bathrooms
Properties with more rooms and bathrooms, are generally valued higher than properties with fewer rooms and bathrooms because it is liveable space that is important. Buyers are looking for specific type of accommodation (for example, 3 bedroom, 2 bathroom etc).
4. Age
In most cases, houses that are new will be valued at a higher price because plumbing, electrical, roofs and appliances are generally newer than a property that is 20 years old. This means there is fewer possible renovations to embark on.
Tools to valuate my property
3%.Com Properties offers a free physical valuation of your home through an FNB professional valuator. Contact us today to find out more.
The tools to help best evaluate your property are the following:
1. Automation Valuation Models (AVMs)
AVMs are online tools that can assist you in determining the value of your house without being physically present with an agent. These online tools use algorithms and data made available to the public, as well as property databases that consists of property characteristics, market information, price trends, and sales etc.
The pros of AVMs:
- They are convenient as the forms do not take long to fill out, therefore, saving time and effort.
- It helps prospective sellers to call an agent or for an agent to get in touch with the prospective seller for filling out their details.
- Property valuations in person can be pricey, and it can save money for prospective sellers to obtain a fair market value of their property.
The cons of AVMs:
- May not be as accurate because of relying on public data or because information may not be updated in property databases. Therefore, the data entered into AVMs should be of high quality.
- Property condition and improvements or remodelling of the property may not be accurate because of the data applied in the algorithm.
- The reports are fully objective because there are no personal touches to the valuations that an agent would provide from having a better understanding of the property. An automated valuation would know the erf size and property size, but it wouldn't necessarily know the number of bedrooms and bathrooms on a property. This may result in a home having a higher or lower estimated value.
2. Comparative Market Analysis (CMA)
Property Practitioners make use of the CMA tool, which involves a physical valuation of the property, as well as the data. The property practitioner will carry out a comparative market analysis in order to arrive as close as possible to the true market value of the property. This is done by examining the prices of which similar properties in the same area are recently sold for.
The only real predictor of future behaviour is past behaviour, meaning that the only indicator of a property price we have to work with, is what properties have sold for in the past. A CMA consists of information on the subject property as well as similar properties that are for sale, similar properties that have sold, and lastly similar properties that have either expired or have been withdrawn and therefore, leading us to the estimate value of the subject property.
Therefore, the factors considered in the analysis are:
- The prices of comparable properties recently sold.
- The prices of comparable properties still on the market.
- The prices of comparable properties that have been withdrawn.
In order to qualify as comparable, the homes on your CMA must be a similar size (m² under roof and erf size), of similar age, with similar amenities, upgrades and condition. Properties being compared should also be in the same area and in similar locations. For instance, a residential property on a very busy road would generally have a lesser value when compared to a similar residential property in a quiet cul-de-sac.
3%.Com Properties can help you sell your home by conducting a thorough CMA. The CMA will also consider estimates received in AVM's.
The pros of a CMA:
- Agents have access to property data every day and from different databases to make an accurate estimate of a property's value.
- When creating a CMA, a real estate agent knows how to adjust prices to reflect variations in the value of homes in your particular neighbourhood as they can add a subjective approach.
The cons of a CMA:
- Although every attempt is made to arrive at a true market related estimate, there is room for human error and the valuation of your property may be higher or lower.
FNB free bank valuation
3%.Com Properties partnered with FNB to provide sellers a free bank valuation by an independent professional valuator, appointed by FNB. This can help prospective sellers to obtain the maximum value out of their home and buyers have a higher chance of finding a loan, because the value is already professionally determined. Everyone wins.
Conclusion
Home valuations are an important step to take when looking to sell your home. 3%.Com Properties can assist you with all 3 types of valuations and will advise you on the best way forward to get the maximum value out of your home The best part is, we sell your home for only 3% Sales Commission!
Contact us today!
Author: 3%.Com Properties