When it comes to valuations, a concept that often comes up is that of a ‘Fair Market Value’ of the property. What is it, you may ask? Well according to the International Valuation Standards Council (IVSC) it is:
“The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.”
This is also called an ‘arms length’ transaction.
When it comes to the valuation of your house, townhouse or apartment, we look at the price based upon what your property would reasonably go for on the open market, weighing in the aspects that contribute to the value of the property. Using advanced valuation tools, there are a few important factors that we look at.
We start by looking at sales within the same street (if it is a house) or within the same complex (if it is a unit) and determine if it was advertised and sold by a selling agent. The sales we prioritise are the ones that are the most similar to your property. So for example: For a 4-bedroom, 2 bathroom brick house on a 500m2 block of land, we look to find other properties that have sold with the same characteristics. This is called a ‘like-for-like’ comparison.
Next, we look to use the most recent market sales. Ideally, sold within the last 3 months but if there are not enough recent like-for-like sales, then we go further back in time.
Finally, if there are few ‘like-for-like’ sales within the same street, we then push our search radius from the property further to find enough sales that are the most similar. Up to a 5 kilometre radius within metropolitan areas.
This is the foundation of what we look for with regards to a fair market value of the property. There are many other aspects that we look at as there are many variables that can contribute to the value of a property. If you would like to know more and see how we can help you find the value of your property, feel free to send us an email, make a call or fill in our contact us form and one of our friendly valuers will assist you.