When you hold you first Open Home for your new or near new home you will have two types of visitors.
1. Lookers, just as they would visit a show home, looking out for ideas and colour combination’s for their own new build. Also getting ideas for wardrobes, kitchen/bathroom/garage/hallway storage options, inspecting your style of light fittings/switches/dimmers/etc, etc.
2. Genuine buyers looking to buy a near new home, perhaps time constrained and who just don’t want to wait 3-6 months for a completed one. Some may already have been past “new or near new build” owners, who, now that they are reaching mature years just do not want to go through the whole driveway, footpaths, fencing, garden, landscaping thing all over again from scratch and want it already completed, preferably in an “easy-care” way.
However crucially with a near new home comes one important proviso that doesn’t come with older homes, and that is, buyers for your home are going to consciously compare your For Sale Price with that of buying a section and building a new as advertised $1000 a sq metre dwelling on it.
From experience I can tell you that many don’t make the next logical connection, that once you add those two together you still need to allow another $30-50k to satisfactorily complete the driveway & paths, fence the property, landscape it, fit drapes and curtains, garage/workshop bench/shelving fit out, garden shed and concrete base, clothes line, etc.
Pricing a home is a very subjective thing, no emotion should come into it, it needs to be clinical, easily said, harder done.
If one of the agents who appraised your property got it right 100% of the time, don’t you think they have just hit on the idea for what might become the most successful non-food related franchisee idea in the world.
If they do get it right 100% of the time, then shouldn’t they be on a plane to New York, London, Tokyo or Sydney where they would be busy 12-14hrs a day, and become multi-millionaires with-in a year? But alas this isn’t the case, and even valuers who train for years, and spend 8hrs or more a day on the job perfecting their valuer / appraiser skills, still don’t get it right 100% of the time.
If you’ve got a recent opinion of value from an industry professional, then you may have seen something like the above in the attachments, sometimes with colour photos of the relevant SOLD properties.
Its data on sold properties from REINZ, and when completing an appraisal, its one of the sources we use to query comparable properties sold.
As part of the process I conduct to arrive at what I believe is a accurate opinion of value, I extrapolate this data and compile my own comparable SOLD properties price list like so….
This aids me greatly, and should so for others to do it themselves too, in allocating my opinion of value to a property.
Long story short, here is what I do and keep in mind this only works on exact comparables, i.e: New for New – apples for apples style. After pulling all the sq m of homes up, (which I might add some agencies are very slack at entering!) I then subtract the CV value of the land from the overall CV of the property. This should by rights give me a close approximation of the build cost. This build cost is then just reversed back to a sq m costing. That allows me to work out an average or median for that suburb, or even drill down to the actual sub-division itself.
I highlighted land + sub-division above, because this part of the equation is easy, demonstrable and as transparent as can be.
Practically all new land releases/ subdivisions, except for possibly the largest/best/best view block, generally have a price usually with 5% of each other so that helps to make the median on the land side of the maths pretty accurate.
Clicking on the above calculation chart you will see the medians. (admittedly based on a smaller sample than I would like, but had no other choice for this data range)
In the above example, it shows $1393m2 based on CV wise and $1402m2 based on the actual selling price. You would also be wise to look at “days to sell” in conducting this opinion.
These calcs work well, as I mentioned above, for new or near new builds, its not so reliable for older homes.
A reasonably tight range I might say, if an agent came along and said I can sell it for $X, and yet that price worked out to say, $1650m2.
If its $250m2 more expensive that the past recent solds, then the home had better have a reason that no one has seen or been made aware of yet.
Does it have hidden cellar, fallout shelter, a walk in fridge, a hidden outdoor entertainment area with winter fire/pizza oven, perimeter lighting with laser security spotlighting & CCTV Alarm feature, copper spouting, whole house underfloor heating powered by solar roof panels, etc I’m sure you get the idea.
If it has cost that much to build over the median home build cost for the previously sold dwellings, then buyers better be able to see it, and if all the other agents missed those features above, then, well…..?
So in summary, if an agent came along and told you they “can sell your property for $XXXXX” yet that was $30K above what the other agent said, are they just telling you “what you want to hear” to get the listing? (commonly referred to as BUYING THE LISTING in the industry)
Or can they show and demonstrate how they got to that conclusion, and are those figures / math’s included in your opinion of value given to you in writing, or is it “something they did back at the office.”
In these days, and with such a large amount of money at stake, your home, shouldn’t you be able to see how they justify their opinion?
Keep in mind this is just one of the three methods, I like most agents, use to come to an overall opinion we feel confident to stand by.