What is the value of my home?

When buying a home, it’s good to know how to accurately estimate the value of the properties you’re interested in.

It’s difficult, however, to find accurate advice and there is a lot of conflicting information from the media and real estate agents.

This page is a quick guide to help you learn the process of valuing a residential property.


The definition of "market value"?

The market value of a property is the price that would be negotiated between a willing buyer and willing seller in an arm’s length transaction after proper marketing.

The value isn’t the current listing price nor the amount of the most recent offer on the property.

Please be aware that this page contains general information only and that if you follow any of the below steps you do so at your own risk.

We recommend that you pay for a valuation from a professional.


Step 1: Find local sales

The most common method of how to value a property is to compare it to properties that have just sold in the local area.

We recommend that you only consider comparing sales with the following attributes:

  • Within 1 km of the property you’re buying (larger areas for country regions).
  • Sold in the last 6 months.
  • Similar to the property you’re trying to value.

You can get a list of sales for any suburb or postcode from Residex or CoreLogic RP Data.

For our customers: We can send you a list of sales for properties in most states for free as we subscribe to CoreLogic.

You may also be able to find comparable sales by looking through the sold properties section of real estate websites.

Try to search for the suburb you’re interested in and then sort the results so that the most recent results are displayed first.


Step 2: Are they comparable?

Of the properties that have sold recently focus on the ones that most similar to your property.

In particular, look at the following attributes:

  • Location: Is the location the same distance from amenities / transport and are both streets similar in appearance?
  • Size: Is the land size similar and is the living area similar?
  • Rooms: Are there the same number of bedrooms, bathrooms and car spaces?
  • Quality: Are both properties of a similar standard?

It’s critical that you compare properties that are as similar to your property as possible, otherwise your final figure will be inaccurate.

How do you know if the properties are comparable if you haven’t been inside?

Try searching in the sold properties section of real estate websites and you can often find the old listings of that property.

You can also try doing a Google search for the address.

Driving past the property or using street view in Google Maps is another good way to get an idea of what the property is like.


Step 3: Superior or inferior?

Once you have a list of 3-5 properties that are similar to the property you’re looking at, try to decide which properties are superior to yours and which are inferior.

Try to be objective.

If this is difficult for you, ask a friend to decide which ones they think are better.

You should consider the location, land size, living area, parking, views and standard of finishes when considering whether properties are superior or inferior.

Bank valuers will normally look at the land and the building separately when doing this.

They may say something like “Superior land size & location, inferior improvements (house), overall the property is slightly superior”.

You should now end up with a range for the value of your property.


Step 4: Adjust for market movements

In a hot market, comparable sales from more than 3 months ago are no longer an indication of current market conditions.

Make small adjustments to your estimate value to take this into account.

If you’ve been going to lots of open homes and auctions, you should have a good feel for what the market is like in your area.

You can also use some of the figures listed at the bottom of this page to help you gauge how hot the market is.


Common mistakes

If you’re careful and do your research properly then it’s possible to accurately value properties using the above method.

That being said, some people make mistakes that result in them offering too little and missing out on a property or overpaying.

Comparing properties on the market

Properties on the market can’t be used in a comparison as they have not had an agreed price as yet.

All you know is what the seller is willing to sell for.

Many sellers have unrealistic expectations so please only compare your property to properties that have sold.

Being influenced by the agent

The agent may tell you of other offers on the property or interest at a particular price.

In most cases, the agent will be telling the truth but you can never really be sure.

Rely on comparable sales only and ignore anything the agent tells you about other offers.

Not comparing apples with apples

Many people compare properties of completely different sizes, quality and locations.

Be careful to make sure the sales you use are truly comparable.

This is most difficult in markets with very few sales or for unique properties.

Emotional attachment

People selling their home often have a strong emotional attachment and believe their home is worth more than it actually is.

Buyers can also fall in love with a property and end up offering over market value in order to secure their dream home.

Not knowing the market

We strongly recommend that you go to as many open homes and auctions as possible so that you really begin to understand the market.

Otherwise you will not really know which locations are superior to others.

New properties / off the plan

People often pay a premium for brand new properties.

Try to compare your property to sales outside of the complex you’re buying in as they tend to be more accurate.

Government incentives for buying a new property can temporarily inflate demand making properties appear to be worth more than they actually are.

The biggest mistake of all is to listen to the media!

Australians love to read about property!

The media capitalises on this by running a story every time a new statistic comes out or an “expert” proclaims prices are going to plummet or skyrocket.

The media isn’t a trustworthy source of information about the future of house prices.

Try to get your information from Residex or CoreLogic instead.

Both have regular newsletters based on real facts and statistics.

They have no vested interest that would cause them to mislead you.


Useful data & figures

There is no shortage of figures available to you that can help you learn more about the property market.

Below are the ones we believe are most useful.

Median house prices

The median house price is an indication of what a mid range house is worth for a particular area.

Be careful if the location has not had many sales recently or has had a large new development sold there recently.

This figure can be misleading for units because many of the sales are for new units not existing developments.

Auction clearance rate

This is the percentage of auctions that result in a successful sale either at auction, before auction or just after auction.

This varies across different markets but the trend is an excellent indication of the current level of demand.

Discounting percentage

This is available on the suburb profile on the Domain real estate website.

This figure shows the average discount below the listing price that is agreed on.

So if a property was listed for $1,000,000 and sold for $900,000, the discounting percentage would be 10%.

Days on market

This is the average number of days it takes to sell a property in that location.

Again, this is an excellent indication of the level of demand in a particular suburb.

Be careful: facts and figures can be easily misinterpreted or can be twisted by the media.

In addition to this, aside from the auction clearance rate, most of these figures will be at least a month or two old by the time they are published.


Benefits for our customers

If you’re one of our customers, we can help to provide you with data and lists of local property sales using our subscription to CoreLogic RP Data.

Please contact your mortgage broker for more information.

If you’re not an existing customer, please complete our free assessment form to find out how we can help you find a home loan and comparable sales for the property that you’re buying.

Please note: we can’t always obtain searches for properties in Victoria as the state government has put restrictions on the information available to RP Data.

  • Joanne

    I have my property valued recently but the valuation came low than what we’d anticipated. So, can you suggest some lenders who usually value property more than the rest?

  • Hi Joanne, it is not certain that some lenders value a property more than the other. The valuation is usually done by an independent third party or in few cases, by a different department of the lender. There are times when the valuation might differ based on lenders, however that is because lenders can have different criteria on what they consider higher or lower risk in a property.

    If your valuation has come low, speak to our mortgage brokers who might still be able to help you with your loan.

  • rocher

    Tried this but seems a bit too hassling for me. Can’t we get a free report with some banks or something?

  • Hello rocher,

    Whenever you apply for a home loan the lender will always make an assessment of the property to see what its value is. With most of our lenders we’re able to order this valuation before you apply for a home loan. You can find out more about this here:
    https://www.homeloanexperts.com.au/home-loan-documents/free-upfront-valuation-report/

  • IslaHalford

    Hi, a friend recommended your website and I’ve been going through it and have found it pretty informative. I read somewhere that your services are free of cost in most cases. How come?

  • Hey there, thanks for your comment. Yes, our services are free in most cases because we’re paid by the banks for introducing loan applications and for doing some of the work that would otherwise be completed by one of their staff. Also, the lenders won’t charge you a higher interest rate if you go through one of our brokers. In fact, we can usually negotiate a competitive discount for larger loans.

    However, there are cases when we may charge fees so please check out our fees page to learn more about this:
    https://www.homeloanexperts.com.au/about_us/our-fees/

  • Arny

    Can I please have one of your brokers to contact me? Where can I leave my contact details and a bit of info on my situation?

  • Hey Arny, you can simply email your info and details to us at info@homeloanexperts.com.au and we’ll have one of our brokers contact you.

  • Grey

    I actually wanted to value vacant land but I’m finding it quite difficult. Comparable sales are also non-existent. What should I do?

  • Hey Grey,

    You may have to enlist the services of a professional valuer for this. Lack of comparable sales also means that you can have a tough time getting approval for a mortgage. Please call 1300 889 743 if you’d like to speak with one of our brokers about this and about what finance options are available.

  • Gupta

    I have shortlisted a new apartment for buy in Parramatta, I am not sure what should be its buying value? I am a Aus PR but in Singapore and haven’t been to australia yet so I am buying this property for Investment purpose at the moment. How much negotiation is possible on the quoted prices by the developer?

  • Hi Gupta,
    Yes this is ok you can qualify to borrow up to 80% of the property value and potentially up to 90%.
    Be careful of buying off the plan as it has it’s own risks and lending policies may change between now and when you settle the property.
    Typically most developments have fixed prices, but some can be negotiated. Typically a maximum of 5% discount. But keep in mind that developers can set their prices wherever they like so that doesn’t mean the price being offered is fair. You should look at what properties sold in the area to get a better idea of what the property that you’re buying is worth.

  • Gupta

    Thank you very much for response.
    So
    “You should look at what properties sold in the area to get a better idea of what the property that you’re buying is worth.”
    – Could you please advise where is the best place to get the correct details of recent sale prices for the same property?

  • Hi Gupta
    Your mortgage broker can give this to you for free. Or you can buy a list of recently sold properties from real estate investar or RP data.

  • Gupta

    Thanks
    Also i got Australian Permanent resudency 4 months back. I am in singapore and will visit australia first time next month for 10 days. I heard that there is some rule where I will have to pay extra 4% foreign levy surcharge as I have spent less than 200 days in australia in the last 12 months. My query is if I am eligible to buy second hand apartments or I will have to first complete 200 days in australia.

  • Hi Gupta,
    My understanding is that as a PR holder you wouldn’t pay the additional stamp duty. However I could be wrong, best to call the duties hotline for the state that you’re in. I’m assuming you’re buying in NSW so you can email duties@osr.nsw.gov.au or call 1300 139 814.
    You are eligbile to buy a 2nd hand property in Australia. Check with your conveyancer to make sure before you proceed. If you don’t have one we’d recommend this one here https://www.homeloanexperts.com.au/recommended-conveyancers/nsw-conveyancing/

  • Gupta

    Thank you very much for your response. Its been very helpful to get so clear cut answers from you. Thumbs up to this site. The email id you have provided is of great help. I have emailed on this id with this query.
    It seems there is some recent ruling on this since 21st June,2016

    http://www.osr.nsw.gov.au/info/legislation/rulings/general/g009

    “A person who is entitled to reside in Australia under a permanent entry visa (i.e. a permanent resident) is not subject to a time limit and is only classified as a foreign person if the person does not meet the test of being ordinarily resident in Australia, namely, the part that requires that the person has actually been in Australia during 200 or more days of the preceding 12 month period (see paragraph 10(a)).”

  • Thanks it’s rare someone teaches us something!