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5 prices for the same house

By madhu on October 21, 2016
A tale of five prices for a single property Have you ever wondered why a home can be listed for one price, valued at another, lender-valued at yet another price and then sold for a figure that leaves everyone scratching their heads? This scenario is like the tale of the 6 blind men and the […]

A tale of five prices for a single property

elephant

Have you ever wondered why a home can be listed for one price, valued at another, lender-valued at yet another price and then sold for a figure that leaves everyone scratching their heads?

This scenario is like the tale of the 6 blind men and the elephant. Each touched a part of the elephant and decides the whole big picture without any input from the others.

The bank value

If your home is mortgaged, your lender will definitely value it. This gives the lender confidence your asset offers ample security against the borrowed amount if, for some reason, you cannot pay your mortgage and the lender must sell the property to recoup its debt.

It is therefore unsurprising that a bank valuation will usually be conservative, sometimes 10%-20% less than the current selling prices of comparable homes.

The selling agent’s price appraisal

Real estate agents are commonly asked to assess the market value of your property. This will often help a vendor decide who to engage to sell their home.

An agent will  inspect the home and research comparable sales in the local suburb or town before producing written feedback with a sale price estimation such as “between $X and $X” or “from $X”. This price guide is used when advertising the house.

The sale price

The price the successful buyer is prepared to pay, and the vendor is willing to accept, on the day the contract is signed is the property’s legally binding sale price.

Hot markets, high demand in certain areas and a big turnout on auction day can all have an effect on the final sale price for a property.

The local council’s valuation

The annual local municipal rates bill shows the notice a Capital Improved Value (CIV), site value, net annual value (NAV) and/or gross rental value (GRV).

These figures are calculated using varied methodology including comparable sales data and the bi-annual figures from the State Valuer-General’s offices.

Councils, and water and fire authorities, use these figures to work out how much homeowners owe them for using their infrastructure and services.

The homeowners’ price

Every property owner will have a ‘dream price’ in their minds when they come to sell. It includes the memories, convenience factor and any add-ons made to the property.

In the end the market will usually decide a property’s value by what a buyer is willing to pay for it at auction or through private sale. What are your views? Are you looking for a valuation on your property? We can help you. Contact us today.

 

 

Article written by madhu

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