As a property buyer you must know the purchase price of the property you intend buying. There’s an old saying in real estate…you make your money when you buy. Our Buyers Agents in Sydney can quote numerous examples where this has proven to be true.
This article from Your Investment Property provides one of the most comprehensive discussions I’ve seen on pricing your property purchase.
As A Property Buyer You Must Know The Purchase Price
Knowing how to value a property is an essential part of the investment game.
When it comes to buying, you’ll want to know the value of your target property to ensure that you’re not paying over the odds, and when selling you’ll want to know how to set your price expectations realistically.
If it’s an existing property that you’re looking to sell, your first port of call may well be a real estate agent’s appraisal.
The good news is that appraisals are free, as it’s all part of the agent’s plan to get your business. And, if you’re dealing with a realistic and experienced agent who knows the area well, then their assessment of how much your property could sell for shouldn’t be too far off the mark.
“If you’ve got a real estate agent and a valuer – assuming both are coming at it with the same intention – both will come up with the same figure,” says Herron Todd White certified practising valuer Kieran Clair.
“A valuer will say that your property’s worth between x and z, and the valuation is y – in the middle. A real estate agent who’s worth his salt will say your property’s worth between x and z, ‘but I’m going to list it forz plus 5%. And if you mow the yard, tidy up the spare bedroom and give it a paint, I reckon we can give it a nudge’.”
WBP Property Group CEO and certified practicing valuer Greville Pabst warns, however, that sales agents who are hungry for your custom may falsely raise your expectations.
“If you’re contemplating selling your home, and you engage three local agents to come round and give you an appraisal, the motivation from the agent is to provide you with the highest price. And it’s human nature that you think that your property is worth more than what it might be,” he says.
“Many people are thus inclined to choose the agent that gives them the information that they want to hear.”
Auction day then comes around and the agent can blame poor weather, or say that the interested parties have failed to show “and then they start to squeeze the lemon and condition you into what the real price is.”
It’s also worth noting that the real estate agent that you’re dealing with may have limited experience in the field of appraisals.
“That person may not be a fully-licensed agent. They may just have an agent’s representative’s license, which means that they can act as a real estate agent and give appraisals, but they’ve only done a six-week course and prior to that they may have been selling washing machines or cars,” says Pabst.
“So there is a real difference in qualification in that a valuer must first have a bachelor of business degree in property, which is a four-year course, and then must have a minimum of 12 months’ practical experience in the field before he or she can then be qualified as a certified practising valuer.”
[Read on...] to learn all about other property valuation methods including automated valuation models, desktop valuations, kerbside valuations and full valuations.
Are you looking to buy real estate? As a property buyer you must know the purchase price to avoid paying too much. If you pay more than the property is worth, you will continue to pay for it ‘BIG TIME’ for many years to come. Let us know your experiences by leaving a comment below.