How to Estimate Current Value of The Property as a Buyer?

Hi All,

After saving enough for a deposit, I am starting to look to purchase my first home. Having no prior experience, I have no idea how to estimate the value of a property! I've seen property listings come with an expected "Offers above X" price indication on some properties and some just come without any price indication. I'd appreciate the community's advice on some of my below questions, so I can make an informed decision when putting in any offers. I live in Brisbane and considering buying in the northern suburbs within 15-20kms from CBD.

  1. How do buyers evaluate the potential value of an established house?
  2. Are listings with an expected price indication usually reasonable?
  3. Is the annual land valuation from state government considered the actual value of the land?
  4. How much depreciation can we apply for established houses?
  5. Can I calculate the value of the property based on the current value from the annual land valuation + cost of constructing the same house at today's market conditions - depreciation?
  6. If I were to buy a land in an upcoming stage in an estate, is the price on the lot usually negotiable to some extent or is it fixed? Is there a way to determine how much the site is really worth? Any other factors that determine the price of the lot?

I really appreciate your responses and any suggestions or links to help me understand the real estate market here.

Thanks!

Comments

  • +4 votes

    The best way to establish the value of a property is to research what similar properties in the same area have recently sold for.

    • +2 votes

      Yep - make http://house.ksou.cn/ your best friend.

      That said at the moment we should see prices pivot so remember what sold 1-2 months ago would probably already sell for 5% less in today's market. But after using that site for a while you'll get a good understanding of the price in suburbs you're interested in.

      •  

        I don't quite understand how sold prices of similar properties can influence the value of another property? I can't obviously find the quality of the build of the house that was sold earlier and compare with the one that is on the market. It could have had so many good or bad internal and external features that could have influenced the sale price. For example, the place where I rent now is a basic build compared to my neighbour's property which was once owner occupied for long time and rented for a few years and sold off recently. The house was sold for 15k more than asking price whereas my home is a very basic build and has so many internal leak issues and all fittings are standard and not upgraded ones. If going by neighbour's sale price - my home would be sold by the landlord for at least $30K more than what it is actually worth. Honestly, I don't think it is reasonable.

        • +1 vote

          I would argue you are overthinking it.

          You're looking at the sale price of similar house in the same area you are looking to buy. That will be the most accurate guide you'll find. Look at the pictures, and the finishes etc if you want to be pedantic, but ultimately it's not going to make that much of a difference if you're looking at a similar size block/rooms etc… And for that the site I linked is your best tool.

          "If going by neighbour's sale price - my home would be sold by the landlord for at least $30K more than what it is actually worth. Honestly, I don't think it is reasonable."

          Just because you don't think it's reasonable doesn't mean a buyer will think it's unreasonable. Again the best guide we have is what someone HAS paid for a similar property in the area recently.

          It's like ebay. If you want to check what you can sell an item for, you don't search for current listings, you search completed, sold listings and use that as your guide.

        •  

          $15k is only 2.5% of a $600k house. The key word is similar; no two houses are exactly the same and no two buyers look at a house the same way. One buyer sees the leaks and is wary, the next is a handyman who thinks they can fix it themselves and the third really values the location and is prepared to pay for the leaks to be fixed.

  • +1 vote
    1. Check the SOLD price of as many comparable properties as you can.
    2. Broad generalisation, but … an "auction guide" of $1m means that want ~$1.1m. A "for sale" of $1m means they'll probably take ~$950k.
    3. No.
    4. Zero if it is PPOR. Otherwise, there are relatively complex rules on this for investment properties. No simple answer.
    5. No. People will pay more for a house that is built and functional, then a empty plot of land and a plan to build.
    6. Everything is negotiable, although new estates are often popular and therefore the prices tend to be more fixed.
    •  

      4 - 0 depreciation if PPOR? You think if it’s your principle place of residence the building will never have any wear and tear and never depreciates in value? Except for the land itself anything else on the land undergoes depreciation!

      •  

        When buying property, depreciation means zero.

        I've bought property where the house is nearly 100 years old. It does not mean the value of that property is just the land value. If the house is in sound condition and habitable, it still has value.

        I've bought property and sold it again within a year at 20% gain even though nothing has changed in land value.. all because of the location was something that a person really really wanted.

        You can't bring the price down to a simple mathematical formula. There is a massive emotional content in it. Hence the only way is to research the area, go to auctions in the area and understand what they are selling for and who is buying them. A similar house is basically one with a similar land size, similar number of bedrooms and liveable area. Condition matters a little bit, but minor things like a leak here and there won't matter much.

      •  

        Depreciation in the sense of being able to claim a deduction for it. If you can't claim it, it's not worth talking about in this context.

        •  

          Agree in the context of tax deductions. From the OP's thread of thought; I assumed he was asking about depreciation in the context of determining value of a property.

  • +2 votes

    You offer what you think it is worth, and are willing to pay. If they accept your offer, great, if not, then no great loss, as the property was not worth it to you.

  •  

    Everything down 20%

  •  

    the value of anything is what people are willing to pay…just because a seller sets a certain value doesn't mean anyone or everyone will pay that price. some will think the value is lower and some are willing to pay higher.

    lots of factors come into play. if you wanted to buy in a specific area for a specific reason then you'll value it more than someone else that doesn't have the same reasons as you do.

    don't value things emotionally and you will see a difference.

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