Realistically, a property is worth whatever someone is willing to pay for it, but if selling or buying is something on your mind, you’ll need a more accurate estimation.
There are a few different ways to work out a home’s value, some more formal than others. From online valuation tools to call in professionals for a full-blown property valuation, here are the different ways you can determine the value of a home.
1. Online estimators
Automated online estimators look at the size, features, and location of a property, as well as recent sales in the area to formulate an estimate. They’re often free (some require sign-up) and will offer you a pricing bracket or range.
It’s a good starting point, but relies on data from recent comparable sales – so if the property you’re looking to value is unique or quite high-end, these calculators might not be the most appropriate tool in your belt.
It’s also worth adding your own research to the mix, looking at sold listings for comparable properties in your surrounding area.
2. Appraisals
Another way to discover a property’s current worth is by asking a real estate agent for an appraisal.
Not to be confused with a valuation (more on that below), an appraisal uses the expertise of an agent to determine the estimated market value of your property, but has no legal standing and should be used only as a guide.
In other words, an appraisal is the price range an agent believes the home is worth and therefore will likely sell at.
Agents will also use their local knowledge when forming the estimate, as they’ll often be familiar with market demand for properties similar to yours and know how many buyers are actively looking for similar properties.
Appraisals are free and it’s in your best interests to request an appraisal from two or three agents you’re considering using.
3. Valuations
A property valuation differs from an appraisal in that it is a legally binding detailed report of a property’s market value, examining aspects of the property beyond its size and location. It is undertaken by an accredited valuer.
They’re usually done in situations where a definitive value is needed, such as family or partnership settlements. Banks and lenders will also use valuers to get a clear and legally-sound estimate of a home’s worth prior to approving a loan or refinancing.
But your run-of-the-mill buyers and sellers can also find advantages to this more formal valuation.
Buyers can reduce their risk of overpaying for a property and for sellers, the detailed analysis of a property’s weak spots can help you decide which renovations to make to increase a home’s value.
As valuations are undertaken by professionals, this is a paid service. The majority of valuations will cost between $300 and $600, usually sitting at the $500-mark.
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