Property Values In The Spotlight
Understanding How It Works Puts You In A Better Position To Negotiate.
When a property is placed on the market, deciding on its ‘fair market value’ could rapidly become a point of contention between seller and agent. But understanding how agents determine this value and exactly what adds value to a property puts sellers in a better position to negotiate.
The comparable sales method is the most commonly used by agents and remain the most accurate. With this method, the first thing an agent will do is to examine the recent sales of at least three properties in the same geographical area as the property on sale. These need to be comparable in building style, size and construction; and will give them a good understanding of a property’s market value.
Bear in mind that comparable sales should include characteristics similar to a given property, such as plot sizes, square meters, home style, age and location.
Remember that some properties which are seemingly similar might not be selling for the same prices and there could be a number of reasons for that. Better location, garage(s) and additional parking space, larger garden with entertainment area, en-suite bathrooms, larger bedrooms, larger internal square meters, newly fitted bathrooms or kitchens, because it is better maintained or it has a better view.
In addition to looking at properties sold in a target area, your agent will also look at properties that are currently on the market. While asking prices are not sold prices, it will give him an idea whether the local market is heading-up or down. While many factors come into play when evaluating a residential property’s value by comparable sales, the three key factors are location, size of the home and number of bedrooms.
Three-bedroom homes are generally far more appealing than two bedroom homes, but four or five-bedroom homes don’t add as much value over a three-bedroom if they are roughly the same size in square meters. Likewise, two bathrooms is a big plus over one bathroom, but three or more don’t add much as much value.
When comparing bathrooms, make sure you understand the different types of bathrooms and compare them correctly. A full bathroom includes a shower, bath, toilet and a basin. A three-quarter bath has a shower but no bath, plus a toilet and basin. A half bath has a toilet and basin but no bath or shower.
A three-quarter- or full-bath create roughly the same value, particularly if another bathroom in the house has a bath. A half bath has less value unless there are enough other bathrooms in the house. An en-suite main bathroom is particularly appealing and will add value to any home. Kitchens are critical, with most people desiring a big kitchen with a lot of worspace. Buyers look for solid surface counters and high-quality flooring, such as wood, laminate, tile or stone. Even if a kitchen is not huge, it should have counter-tops that are serviceable that won’t have to be replaced soon, and cabinets in good condition.
If a house doesn’t look appealing from the outside, chances are a potential buyer will never make it inside. If the exterior colour of a house is dated or fading, painting is a good place to start your improvements.
Choose colours and exterior details that match the period of the house. Paving a driveway or walkway that is in disrepair is a must, because this is what leads people to the home – you want it to be welcoming. Attractive gardens and sufficient security will also add value to a home. Most buyers will look for a double garage.
However, if the house in the area are all small and there’s a mix of garage options, the garage won’t be a big of an issue. Complexes are the exception to this rule, however even here the more covered parking space you have the higher your sale price could be.
Armed with the correct knowledge, you will be able to get the best price possible.