If you’re thinking of selling, the chances are you’ve already tried to work out the value of your home.
You might have ordered one of those online valuation reports (and likely thought it was a load of rubbish), checked out what else is being sold in your ‘hood, or worked out what it ‘owes’ you.
The problem is, none of these are how a valuer, real estate agent, or, more importantly, a buyer determine value.
So let’s look at the top 4 mistakes we at Red Fox see potential sellers make.
And the best way to work out what your home is really worth.
1. Online valuation reports
Also called Automated Valuation Reports or AVM for short. They’re computer-generated estimates. A computer doesn’t know that you’ve done renos, what school zone you’re in, or which side of the railway line you’re on.
In most cases, they’re a heap of crock. Nevertheless, buyers & brokers love them.
2. Other properties advertised online
What a home is advertised for and what it sells for are two different things. I’d love a dollar for every seller that said to me, “But if that’s worth that, mine must be worth this!”. It’s not. Until it’s sold, the asking price means nothing.
3. The cost-plus approach
This is where a seller goes:
$Purchase price + stamp duty + cost of renovations + agent selling fees + cost of marketing = What I want as a selling price.
We totally get it. No one wants to lose money. However, the problem we’ve got in the Perth market is that at the time of writing, property prices haven’t yet recovered back to the same levels as the peak in 2014.
For some sellers, homes are still worth less than what they owe them. This is particularly true in the multi-residential market. It is changing and depends on when you bought it, but the market hasn’t fully recovered yet.
The danger with hanging on for the market to further improve is that the gap between where you are and where you want to be will likely widen, too – costing you even more money.
4. The cost differential approach
Typically looks something like this:
$cost of the house I want to buy +/- the amount of mortgage I want (or can afford) + my new car/holiday = What I want as a selling price.
We’re saying this with love – a buyer doesn’t give a fig about your plans or what you think you want or need.
They want to buy a home for what they think is fair market value. And they’re the ones with the cheque books.
So how do I know what my home is really worth?
Bottom line? Your property is worth what a buyer is prepared to pay for it.
Not what an agent, valuer, or anyone else says.
Recent sales evidence provides an indicative price guide. It’s a wet finger in the prevailing market wind if you like.
But it’s not the same as what we might sell your home for.
Our mission, once we accept it, is to find you the best buyer. Not just the first one or a buyer that’s already on our database.
At Red Fox, we know that different buyers can look at the same home and see very different values depending upon:
- How well it meets their needs
- How much they love it
- What their circumstances are
- What they can afford
The best buyer is the one that’s prepared to pay you the most amount of money and/or offer you the best conditions in the current market.
The truth is that until you get to market, you don’t know who is around and what they might be prepared to pay for your property.
It’s the process we as agents implement, not the price we promise you, that will net that premium buyer.
If you’re thinking of selling, speak to quality local agents across the most recent and relevant sales in your area.
How do you find a good local agent? Head to ratemyagent.com.au, search your suburb, and check their online reviews. Or use reiwa.com Agentfinder.
Don’t take an Agent’s word for it on a guide price. Instead, ask to see comparable sales evidence. Then, be realistic about how your home compares.
Please pay attention to the process they are recommending, not the price.
And never trust an agent that seems to agree with you and tells you that your home is fine as is. They are likely telling you what you want to hear to win your business rather than what you need to hear.
Or call us at Red Fox. We’re here to help. And we won’t BS you to get your business.
