What's the house worth?
The million-dollar question.
There’s many different factors that influence the price of a home. Quantifying those factors that can’t easily be measured is where art meets science, if I can say that without sounding like a complete twat about it all.
What does a buyer’s agent look for?
Yes, we look at comparable sales. Yes, we consider how this property relates to that nearby sale, where the deficiencies and superior aspects lie. But that’s all on-paper analysis and can only get you so far.
What a good buyer’s agent does is look at the intangibles beyond the ‘market value’ of what a quick automation program would spit out at you within seconds of entering an address. It’s impossible to place an accurate price on a property within seconds, so if you are feeling suspect about those ads on TV where the smug buyer in the cafe sits there thinking they “know value” because of some app on their phone, you’ve good reason to be feeling something’s up there. I’ve seen computer-generated reports spit out a $1-1.3m range for a property that sold for $2m.
Two issues with that; how helpful is a super-broad $300,000 range, now really; and also just how far wrong it was for a competitive auction with five bidders competing well over the top end of that auto-report. So please do yourself a favour and ignore the advertising and marketing for these auto-valuer apps. If they really worked everyone would be using them, end of story. But pricing doesn’t work like that. Human emotions and irrational behaviour come into play. Furthermore it’s very rare for an identical property to come up for sale in the establish property market, let alone in the same market environment and under identical selling conditions of the vendor and agent involved. So, how are you to know?
Price comes back to the good old basics of supply and demand.
Price comes back to supply and demand.
A simple equation but with so many nuances and variables involved, it takes experience and an impartial eye to get as accurate as possible. No matter how detached you may think you are, if you like a property then chances are that you’ll have a bias - conscious or unconscious - towards paying either too much (because you really, really like it), or interestingly, a bias towards underpricing. I’ve seen this many times where buyers can talk themselves out of a property from a place of fear. If a property is well-suited to your needs and it’s one that you’d like to buy, don’t overthink it.
A buyer’s agent looks at how the property is presented, its layout and orientation, how well it appeals (or doesn’t) to a target demographic, the emotional appeal compared to other sales and other listings on the market, how long it’s been listed for and how long the other properties are too, as well as gathering information on price adjustments made, how long other sales in the area took to complete, which agent has listed it for sale, the vendor’s situation, the method of sale and how long it took to sell post-auction if passed in. And all of this micro-data relates back to the broader market activity; what are clearance rates doing for that micro-market, what supply is likely to be coming up, the sentiment of the media and Canberra market overall, how are jobs/unemployment/vacancy rates/economic growth etc tracking? Every piece of information needs to taken in context to the others.
These are a few of the factors that come into consideration when assessing pricing. An impartial professional can you assist with this, but again be careful who you take advice from. They need to be at arm’s length from the transaction (i.e. they don’t stand to gain by the advice they give you) and have relevant experience in the industry. Your confident family friend or colleague isn’t always a great advisor when you’re spending hundreds of thousands (or millions) on a property. Base your decisions on fact over opinions and always seek to clarify the difference between the two.
Opinions can sway your decision -be aware of your own and the opinions of well-meaning others
A selling agent can be very helpful to provide information but it’s not their role to tell you how much to pay. That’s your responsibility, to ensure you do the necessary research to pay the lowest price possible. A selling engage is specifically employed to sell for the highest price and is financially rewarded for doing so.
With auction season well underway now that we’re at the Spring school holiday break, you can expect to see more listings coming up over the next 6 weeks before the taper off for Christmas holidays kicks in. Properties listed in October and November will be aiming to be sold by early December (note this year we have 5 glorious Saturdays in November for auctions to be held) so don’t lose hope if you’re yet to find the ideal place before 2020 arrives.
As always, if you need a hand with the purchasing process please get in touch. Saturdays are booking up so please reach out sooner than later so that I can help you.