What is my property worth?
One of the most common questions we are asked as real estate salespeople is how the price of a property is determined. To successfully sell your property, you need to set a realistic price that will attract your ideal buyers.
In this article, we delve into the 6 key factors of property values and share a few helpful online tools to provide you with a rough estimate. Keep reading to find out how much your property is worth, and why.
Factors that impact house values
The value of a property can vary greatly based on several factors, including location, size, age, condition, and local market conditions, all of which we’ll explore in more detail. A factor not listed here, but worth bearing in mind, is vendor (seller) perception.
There’s a well-known psychological phenomenon called the Endowment Effect which leads humans to overvalue the items they own. This is especially true of items with personal significance or emotional value, such as a family home.
This is why it is worth consulting a trained real estate professional who can objectively assess the value of a property, without the bias of the Endowment Effect. They’ll do their valuation based not on perceived personal worth, but by using the following influencing factors:
Desirable neighbourhoods include those that offer a high standard of living, such as a low crime rate, decent infrastructure, and a strong community. Properties located in such areas tend to be in high demand.
Likewise, houses located in a cul-de-sac are often more desirable for their reduced traffic. This creates a quiet and safe space that is suitable for children and animals. In some cases, the benefit of being close to parks and open spaces can outweigh other drawbacks like small section sizes or fewer bathrooms.
Additionally, proximity to good schools is another critical factor in the value of a property. This is because families with children prefer to live near good schools so that their children can have easy access to quality education.
Finally, easy access to transportation, such as highways, airports, and public transportation, can be an influential consideration for many people. This provides residents with convenient and quick access to their workplaces, shopping areas, and other local destinations.
House and land size
The size of a property is a key factor that can impact its value. Larger properties typically command a higher price compared to smaller ones, as they offer more living space, privacy, and the potential for additional amenities like a larger yard or multiple bedrooms. On the other hand, smaller properties are more affordable and require less maintenance, which can make them ideal for those looking for a more manageable lifestyle.
The size of a property goes hand-in-hand with its features and general ‘feel’. For example, a cramped 4-bedroom home may not be as appealing to some as a spacious 3-bedroom home. The individual circumstances of a potential buyer will play a major role in determining the size and features required for their next home.
To appeal to as wide an audience as possible you may need to consider how your home is staged. Might it be better to showcase a smaller 4th bedroom as an office instead of a bedroom?
Age and condition
New or recently renovated properties are typically more desirable because they are built with modern features and materials, are more energy-efficient, and are less likely to require expensive repairs.
The value of older properties, on the other hand, depends on how well they have been looked after. If well-maintained, older properties with character may hold significant value. However, those in poor condition, with outdated electrical or plumbing systems, or that require major renovations tend to be worth less.
Several homes built between the 1980s to the early 2000s have become known as ‘leaky homes’ and buyers may be more hesitant about paying top money for homes built during this period. The government introduced a more stringent licensing scheme for building designers, builders and other trades in the form of the Building Act 2004, to ensure newer houses were built to a higher standard.
A real estate agent will be able to discuss the impact of your home’s construction period on your asking price during an independent and obligation-free property appraisal.
The strength of the economy will also affect the value of your property. If the economy is strong and there’s a high demand for housing, property values usually increase. When the economy is struggling, the demand for housing may decrease, causing property values to drop.
The sale price of your property will depend on the number of similar properties available and how they compare to yours. The balance of supply and demand will also factor into this, with respect to the location, size, number of bedrooms, amenities, and price range of each property.
If there are more properties on the market than there are buyers, prices will likely be lower, as buyers have more choices and there’s more competition among sellers. If there is a shortage of properties for sale, prices may be higher, as buyers are forced to compete for the limited number of properties available.
Another market condition to factor in is mortgage interest rates. High-interest rates may mean buyers can only afford to service (make repayments on) a lower mortgage while lower interest rates result in lower monthly repayments, which can lead buyers to borrow higher amounts and put in more competitive offers.
General economic uncertainty can lead to reservations from buyers. This is especially true if their job security is affected by a slowing economy, or their disposable income is reduced due to the increased cost of living.
If you, as a seller, are not impacted by these factors because your mortgage is paid off or your income can weather the storm then you need to consider whether your target buyer is as fortunate. If your home attracts young families then these concerns may weigh heavily on their decision-making.
For some buyers, there are features and facilities worth paying more for. The amenities can range from functional to luxurious and will appeal to certain types of buyers. For example, some popular features include:
A swimming pool.
A home gym.
Central air conditioning.
Online property value tools
If you’re looking for a rough estimate of your property’s value, there are several online tools available to help. These tools use algorithms that analyse the property's location, recent local sales, size, and features to estimate its worth. These tools use publicly available data, such as recent sales data, tax assessments, and real estate listings, to generate a property value estimate.
These online property valuation tools are not always accurate but they do provide a convenient and quick valuation to help inform your next steps. Where possible, it's advisable to use online tools as a starting point and then get a professional property appraisal for a more accurate valuation.
Because these tools rely heavily on local sales data, it’s worth looking at when recent local sales took place. If they were sold during a property boom then this may make the algorithm assume prices are higher than the current market conditions facilitate. If recent sales were during a slump, your home may be worth more. These systems are trailing systems, meaning they use historic data and don’t always reflect the current reality.
Homes NZ is a valuable online resource designed to help buyers and sellers understand the real estate market. Along with informative articles and current property listings from various agencies, you can easily search for the value of properties in your area. Simply type in an address and public information will pop up, including previous sales data, photos, and the decade it was built.
Real Estate NZ
Real Estate NZ is another hub of properties, including commercial, residential, rural, and rentals. Simply fill in the details of your property to see what similar properties are selling for. You can also use the map view, see previous sales data, and compare it to recently sold properties nearby.
QV, or Quotable Value, is designed to help the public make smarter decisions when buying and selling property. Simply search your property address for the estimated market value, capital value, land value, improvement value, and summary of the property’s amenities.
At One Roof, you can easily search for your address, suburb, or city for a full breakdown of current prices. You can also filter the search results by the number of bedrooms, the number of bathrooms, and the property type.
McDonald Real Estate property tool
For a property valuation in the Taranaki region, our online tool is a wise place to start. Simply search for the suburb and the map will show properties that are currently listed and those that have recently sold. Simply click on each property for a full description, list of amenities, and price estimates.
Accurate property valuations
While the above tools provide a helpful starting point, an appraisal from a professional gives you the accuracy, reliability, and credibility you need. An experienced appraiser will have the knowledge, experience, and credentials to deliver a credible report.
Getting a professional property appraisal is essential for several reasons:
Provides an accurate, non-biased estimate.
Helps in making informed decisions.
Ensures compliance with legal requirements.
Gives market insights.
At McDonald Real Estate, we provide free, no-obligation appraisals for any property in the Taranaki region. Contact us today to find out your property’s current market value.