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How to value a house?????

Discussion in 'General Property Chat' started by HomeMinister, 18th Apr, 2016.

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  1. HomeMinister

    HomeMinister Well-Known Member

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    hi all

    would like to get some of you thoughts on how i go about valuing a property.

    my approach has been simple and old school. i just get the recent land sales

    and relate the cost with -10% due to demolition cost involved if at all i dream of

    knockdown strategy. for the house i value current build cost and depreciate 3% for

    every year it pumped blood out. for instance if recent land sales were 400K i go for

    land at 360 to 380k depending on other goodies like corner block and landscaped backyard.

    for house if current cost id 200k and it is 10 yrs old i go with 140k to 160k for house

    depending on goodies like luxury inclusions.

    what do you recommend? any complex equations are welcome with comments to make it

    easy to understand.

    thanks in advance
     
    Last edited: 18th Apr, 2016
  2. jpcashflow

    jpcashflow Well-Known Member Business Member

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    Hi, The best way to value a home these days is to simply look at realestae.com. There is so much data out there to help out :).

    But always keep in mind what a house is worth and what some one will pay for it are two different things.
     
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  3. Bran

    Bran Well-Known Member

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    I don't think that formula works for the areas I follow

    What do you do for a 100 year old house on a inner city block with no land?
     
  4. MTR

    MTR Well-Known Member Premium Member

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    Exactly, the market will dictate the value.

    Some people may over capitalise for an area, does not mean someone will pay for this.

    So many variables - land size, development potential could increase the land/zoning

    Can also compare recent sales this is what a valuer will do (3 months previous sales).

    When establishing value of a property I always look at recent sales for similar product, location, size of land, development potential, condition of the property.
     
    Last edited: 18th Apr, 2016
  5. pinkboy

    pinkboy Well-Known Member Premium Member

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    A no reserve auction is the only true indicator of a value at any one point in time.

    Second best option is a valuer with extensive market comparables and external influential indicators.

    A real estate agent valuation is a DISTANT 3rd.

    pinkboy
     
  6. HomeMinister

    HomeMinister Well-Known Member

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    Totally agree the age point :30 yrs or so value of house is probably negligible compared to

    the land or is been renovated to take into count.

    Auctions are probably good indicators but so is rental yield. however auctions are not all over

    and some just wait for the right buyer to show up. i guess there is no perfect way to pin but yes

    there is plenty online these days.
     
  7. MarkB

    MarkB Some guy on the internet Premium Member

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    There's been a couple reported in the AU press recently.

    Chelmer house set to go to auction without reserve

    Brisbane Vendor to Auction Brand New Apartment With No Reserve

    And it seems they can work.

    But that is of little consolation to this owner.
    (though that example seems to speak more about the benefits of a good REA who can get people to turn up with their chequebooks, than it does about NR auctions).

    But if NR auctions were reasonably common, then they'd be less successful imo.


     
  8. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

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    Almost always via comparable sales of similar properties in the area within the last 3-6 months. Then you make allowances for the subject property being superior of inferior to those comps.

    Your complex formula is more like the summation method which gets used rarely if no comps can be found, but generally no use in working out what a property will sell for.
     
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  9. Cactus

    Cactus Well-Known Member

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    What the second highest bidder was prepared to pay for it, not the highest bid. ;)
     
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  10. Big Will

    Big Will Well-Known Member

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    A valuer will only use settled sales so it will be more 3+ months.
     
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  11. Scott No Mates

    Scott No Mates Well-Known Member

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    You can't possibly make money in those areas ;)
     
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  12. jpcashflow

    jpcashflow Well-Known Member Business Member

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    A friend of mine bought a home on a large parcel of land three years ago... market would of suggested he paid to much... now his laughing lol
     
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  13. Cactus

    Cactus Well-Known Member

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    I have rarely heard a developer say of another developer they got that at a good deal always saying they overpaid for it but lo and behold PEET, Stockland, Villawood, Saterly etc are still around must be doing something right.

     
  14. Simon Moore

    Simon Moore Mortgage Broker - Melbourne Business Member

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    If you want to get some easy comparable sales you can always get your broker to get you a desktop valuation (assuming your property qualifies). Only takes us 30 seconds to get one done and email it to you.
     
  15. Michael_X

    Michael_X Mortgage Broker Business Member

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    Try the sold section on realestate.com.au. Look for properties that are similar, and compare the prices. The more similar you can get it aka land size, build, condition etc the more accurate your estimate.

    Cheers,
    Michael