What’s your house really worth?

Type your address into any number of free ‘what’s my house worth’ websites and an estimate of your home's market value pops onto the screen in the blink of an eye. Easy.

But whether the figure you see sends your heart soaring – or sinking – take a minute to consider how accurate that property value could be. What about the bathroom upgrade?  The new kitchen? The barbecue area? All that money and time must account for something, right?

Unlike other assets, your home doesn’t come with an annual statement to show its worth. But there is a range of valuation options to choose from beyond the freebie websites that can provide accuracy and peace of mind.

Why would my free home valuation estimate be inaccurate?

The free property value estimate tools you’ll find online use a variety of credible data sources to calculate what your house is worth, so in many cases, the approximate home value will be fairly reliable. However, there are a couple of reasons why the figure you’re seeing may be closer to a guess than a data-driven estimate. 

Many properties are especially unique and so data on similar houses that have been sold will be limited. Or perhaps the area you live in is a tightly held suburb, so no houses in the area have been sold recently. Both situations lead to the same issue... a lack of accurate, comparable data to make a reliable estimate. 

Property value estimations may be less accurate if:

• There have not been many recent sales of similar properties in the same area
• Your house is a one of a kind, so there is not much for the tool’s algorithm to base its estimate on
• There are key data points missing, like the number of bathrooms, size of the land, or any shiny new renovations to parts of the house.

So, how do you find out what your home is REALLY worth?

Market appraisal.

One cost-free option is to have your home assessed by a local real estate agent. This gives you the benefit of a local expert walking through the property in person. They will base their property value estimate on their experience with the local market. They will consider the size, location and features of the property, the demand and overall trends in the property market.

The downside is that a market appraisal is not the same as a formal valuation, and the final figure could be bumped up if the agent thinks a listing could be gained.

Automated valuation models.

Further along the scale are ‘automated valuation models’, otherwise known as AVMs. These are a user-pays service usually provided by property research companies.

For a small fee, you provide your address, and the value of your house or apartment is computer-generated based on a combination of data points. These include recent sales figures in your neighbourhood, the tax assessor’s value, and analysis of sales of similar properties.

AVMs are a budget-friendly option for a home valuation and are faster and more consistent than a human appraiser. However, they are only as accurate as the data behind them. The figure you end up with is based on a wide number of previous sales – and the homes sold may be nothing like your own.

Electronic home valuation.

If you’re willing to pay a bit more, a desktop assessment or ‘electronic valuer review’ can crank up the accuracy factor. 

An estimate of your home’s value will be provided by a property research firm based on recent local sales data backed by either a current photograph of your home or a phone discussion between you and a valuer.

This type of valuation lets you provide more detail about your home, but without a physical inspection of the place, the valuation is far from watertight.

However, similar to the AVMs, they are only accurate when there is enough data to compare the property. They are considered more reliable if your home was sold in the last 10 years, has not undergone any significant changes such as renovations and is in good condition. If this sounds like your house, this could be the home valuation option for you!

Go pro – call a registered valuer.

If you’re looking for a rock-solid estimate of your home’s value, the most accurate (and costly) option is to have your home checked inside and out by a registered property valuer.

These guys are experts. To officially become a registered valuer, they must be a full member of the Australian Valuers Institute, the Australian Property Institute and the Royal Institution of Chartered Surveyors as a chartered valuer. So, what we’re trying to say is, they know their stuff.

The home valuation you receive is based on local sales results combined with an analysis of current market conditions, reviews of any proposed council developments in your area and, of course, the quality of your home (so it’s worth giving the place a spruce up before the valuer arrives).

The valuer will then prepare a valuation report. The figure you will end up with is an estimate of what a willing buyer would pay for the property on the day of the valuation. Sounds fair.

Do you really need to pay for a valuation at all?

You can expect to pay upwards of several hundred dollars for a formal valuation of your place. But here’s the thing. While it is always interesting to know, or at least have a reasonable idea of your home’s value, chances are you may not need to pay for a separate property valuation at all.

If you are refinancing or topping up your loan, it’s likely the lender will conduct an independent valuation of their own and factor that cost into the whole process.

The bottom line is that it’s always interesting to know what your patch of turf is worth. Talk to your lender or speak with an ME mobile banking manager to find out more. 

Meet ME.

Wondering what the value of your home might be? Talk to a ME mobile banking manager to see how we can help you.
 
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