The SEQ market is still quite warm, but don’t confuse that with the crazy hot market we just had for the last two years. Vendors need to consider this point when putting their property on the market. Investors work on the numbers and are increasingly nervous about rising interest rates. Owner occupiers don’t have the rent to add to the mortgage repayments and are increasingly nervous about rising interest rates. It would seem vendors need to consider this if they genuinely want to sell their property. How do know what the value is then? This is how their property will be valued or appraised:
The real estate agent appraisal – up
The buyer’s agent appraisal – down
The bank valuer – as close to right on the money as they can get….but usually pretty conservative.
There are a number of different methods to ascertain what a property is actually worth. Rarely, however, will all these methods arrive at the same destination with what a property is worth to the main player, i.e. the buyer.
Keep in mind that a valuation is NOT the same as a real estate appraisal that would be carried out by a real estate agent. Also keep in mind that everyone who carries out a valuation, or an appraisal, is a human being with the usual human being traits. E.g. a real estate agent would carry out an appraisal in favour of the seller to get the best price for their client, a Buyer’s Agent would carry out an appraisal in favour of the buyer in order to avoid over paying for the property and get the best outcome for their client. The bank valuer would try to get right on the money so they don’t lose their job. So, who would carry out a valuation or an appraisal of the property?
- Real estate agent – Most people thinking of selling head straight to the real estate agent to find out the value of their property in the market. That’s historically the way it’s always been done here in Australia. As a buyer, keep at the top of mind who the real estate agent works for. Are you paying them to get a good property as cheaply as possible? Do they advise you to buy elsewhere because it will better suit your goals? Do they take a smaller commission to help you out? Probably not! They work for the seller and their job is not to turn buyers away, but to sell their client’s property at the highest price possible. Most of them are very good at that. When appraising the property for a vendor, the real estate agent knows that they are bidding against other agents for the sale of the property, so they will try to convince the vendor that they can obtain the highest price.
2. The Buyer’s Agent – Nobody wants to overpay for a property. In some markets, like the last couple of years, such a situation can be recovered quickly with fast rising prices, however, if in a poor capital growth area or a slow market this could take many years to recover and is a must to avoid. Working wholly and solely for the buyer, the buyer’s agent from Premier Property Buyers Australia would appraise the property at what they consider a fair price to pay. During negotiations, they would attempt to drive the price lower in order to get the best possible price for their client. In a normal market, this could mean up to $50,000 off the asking price. We’ve even achieved just such an outcome only recently in this crazy HOT market. In recent years, many buyers are realising that the buyer’s agent fee can be easily and quickly covered by the value provided in obtaining the best property growth to suit their purpose, be that a family home, investment property or even a commercial or development property.
3. The bank – Obviously the bank doesn’t want to lend you $900K for a $500K property. In fact, there’s not much chance of that happening. The bank valuer will put a conservative estimate on the value of the property, which has particularly been the case in the last couple of years. The recent very fast rising market has played havoc with the slow moving bank valuation system resulting in many bank valuers providing valuations well below market prices. In such cases, buyers have had to put their hand deeper into their own pockets to make up the difference. If purchased through a buyer’s agent, ensuring good capital growth, good yield and suiting the buyer’s purpose, this is likely to have minimal effect on the future of your new property.
4. YOU – Regardless of whether you are the buyer, the vendor or you’re just educating yourself about the property market, you can ascertain a good appraisal of the value of a property with your own research. You are the absolute best judge of what a property is worth to you. If you’re interested in knowing how you can do that, keep an eye out for the next PPBA newsletter.
At PPBA we know what’s happening in this cooling market and we’re ready to do the hard yards to find your property and make sure you don’t overpay where price growth is slowing.
Call us now for a totally obligation free chat as to how we can help you.
0490 020 801
