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September 8, 2021

How much is your home really worth?

Your property is likely to be your most valuable asset, but that doesn’t mean its value is set in stone. In fact, valuations change over time and they can also differ depending what that valuation is being used for.

What do we mean? Well, if you’ve ever had a property valued by a bank, you’ll appreciate that the price they come up with might be different to what you had expected and could also be different to the price an agent might appraise your property for.

Meanwhile, the valuation that your council or state government refers to could also be different again.

So, let’s take a quick spin through what each of these valuations means and why they could offer very different perspectives of how much your home is worth.

The bank value

If you are borrowing against an existing home to renovate it or purchase elsewhere, a bank will conduct a valuation to determine their lending risk.

Basically, they’re looking to ensure that if you cannot service your mortgage, they will be able to sell your asset and cover the costs of any loan.

That means their valuation is likely to be conservative as it will also account for market fluctuations. In some cases, the bank valuation will come in at 10 to 15 per cent less than market rate.

An agent’s value

When an agent appraises the value of your home, they are looking at what the market would be prepared to pay for that property in current conditions.

Their price is determined by the property’s size, condition, similar sales in the area at the moment, days on market, and current buyer demand.

That’s not to say all agents appraising a property will come up with the same price, however. And that’s something to be mindful of when selecting the right agent for your property.

While a high price is naturally something you would like to achieve, it’s imperative that price is realistic.

Council value

Chances are, your regular council rates notice also references the value of your property, but in this case that valuation might be presented in a different form.

In some areas, your rates will be based on Unimproved Capital Value, which is what the land (without any buildings or additions) is worth in the current market.

In other cases, council will base their rates on Capital Improved Value, which takes into account the house on the site, local services etc.

Either way, this value is based on a series of methodologies including data from the state’s Valuer-General.

Your personal value

Every homeowner has a figure in mind that they hope their property would achieve if it sold.  They also probably have a lower number that they would be prepared to sell for if they had to.

While every agent would love to see their vendor achieve their ultimate dream price, it’s important to remember the sale price of a property will always be determined by the market.

Sale value

While agents, valuers and councils might offer their opinion on the value of your property, probably the most important valuation is the price you achieve during a property sale.

And there are ways you can maximise that value, including:

Looking to sell your property

If you’re considering selling your property, why not chat with one of our friendly Eview agents on 1300 438 439 to organise an appraisal and understand the state of play in your area?