I see a lot of % values thrown around about capital growth of particular properties, and/or suburbs. Short of getting professional valuation of a property, how is this done? Are they just estimates based on other sales of similar properties in the same area? Crystal ball? I'm not sure how accurate a guesstimate would be - we are always told that a property is only ever worth what the market is willing to pay for it - unless it is currently up for sale, how would you know what this is?
^ ^ this. e.g. A median (1/2 houses sell above this price point and 1/2 sell below this price point) priced home in the suburb may have sold for $150K 10 years ago. Now median priced homes sell for $300K. CG = 100% over 10 years.
Even a professional valuation won't necessarily equal a sales appraisal as depending on the reason, they are used for different things. If a bank sends around a valuer to value a property to extract equity for example, they generally err on the side of caution given the inherent risk associated with the reason so they are likely to trend on the lower side of what the property would actually sell for. Recent sales and median values, taking into account some lag, are probably a truer representation. Having said that, growing your portfolio using equity depends on the normally conservative side of bank valuations so this is really the only figure that matters if you're trying to get money! - Andrew
Most published figures simply compare the median values over a stated period. And since every property is different, the sales will also differ. The biggest problem with this is that it ignores renovation costs. Suburbs undergoing gentrification often are shown as having high capital gains, completely ignoring the fact that many properties have had huge renovations done, and hundreds of thousands of dollars spent in the process which does not show up on the data. Use as a rough guide only. Marg
You cant believe some of those sites where you type in an address and they give you an estimate either ! I typed in my old Geelong West address recently, i sold it in 2011 for $595k, 2012 it sold again for $605k, the "major property advertising site" estimated its current Dec 2016 value to be $520,000,
compare apples with apples, easiest way is to go on realestate.com view sold properties, similar product, similar location over 6-12 month period, then look at recent sales, and compare pricing. Its not hard to work it out. I would also contact local agents and many to find out what has been happening I absolutely would not rely on median house prices these just give an idea too broad, you need to dig in deeper to find out the big picture.
I would ask for a desktop val from your broker and compare it with recent sales of equivalent properties.
Had my place in Norlane West valued by a valuer for a refinance situation just a couple of weeks ago, for $295K-$300K with the three people who did one. Yay, so it's gone up about $40K in the time i've had it. Stoffo, there's every chance your former Geelong West place could be $700K or so, especially if it's inside Elizabeth St and say up from Lawton Ave. Been some places sell for the $800K mark or more in West, particularly if on a bigger than the roughly standard 450m2 block that the old West places tend to have.
Does a desktop valuation take into consideration a large renovation? (Not additional rooms etc, just a lot of cosmetic stuff - new flooring, paint etc). I know our place certainly no longer looks like it did when we bought it.
