How do I know the value of my home?

I am a little confused

• Why does the valuer say my home is only worth $1M when I know I can get $1.2M?
• Why my neighbour sold their house for $1.1M when I know ours is way better?
• Our house has better views, a much better floor plan and is bigger, nicer and new

The questions are common, relevant and personal and my role as a finance expert is to provide answers.

Whilst I might have 15 odd years’ experience in the home loan industry, I do find myself asking similar questions however it is important to take our emotions out of the discussion to understand the answers.

When a property is valued it is important to understand the valuation is mostly conducted by a qualified and professional valuer.

You will often hear them use terms like “recent comparable sales’. That means they have researched the market and found properties similar to yours, but not necessarily your next door neighbour, and established what the property was sold for.

Comparable sales provide an indication of what the local market is like and what your property might be sold for. For example, if a 4 bedroom house with a double garage is sold for $1.1M but the 5 bedroom house with a double garage two doors down only achieves $980,000 a month later, you need to consider;

• the age of the building
• the size of land
• the size of rooms
• the repairs need and what the costs are
• the difference in floor plans and design
• how the property has been maintained as not all buyers can see the potential of the property they are inspecting

Along with the above considerations, you also need to understand or, at least, appreciate all buyers have varying level of determination when they are looking to buy a property.

Some buyers are passive, have time on their side whilst other are more assertive and tired of the whole process, they just want to buy something.

As a home owner we all think our property is worth more, it is human nature, but we do need to have some perspective.

The most regular complaint I receive from clients is that the valuer was only at the property for 10 minutes.  I do understand the emotion in the complaint but 95% of the work required in a valuation report can be completed in front of a computer as the data for recent sales is readily available.

Valuing a property after the sale process has been agreed it relatively easy as the sale price would indicate what the property is worth.

If you are seeking to refinance your home loan your property will be valued and the valuation will be based on how your property compares to the properties recently sold.

If you are looking to refinance it is important to be realistic as to the value of your property.

Hey, I just refinanced and despite telling everyone around the water cooler the property should have been  valued higher, we obtained a lower interest rate and very happy with the outcome.

By the way, I’m still convinced my property is worth more.

Phil Chun is the owner of Phil Chun Home Loans