Getting a house valued could be very expensive but if you need one then it’s an expense you’ll need to live with. It is possible to calculate an estimate of your house’s value for yourself, but this should only be done if you are looking to get an idea of what price your house could sell for. It could also be a fun little exercise but if you need a house valuation in Melbourne for such things as litigations, taxes, or mortgage security then you will need the service of residential property valuers that have been certified by the Australian Property Institute.
If you are determined to value a house yourself, below are some ways you can find out the value of your house.
How Do I Calculate the Value of a House?
There are a few different ways to calculate the value of a house, and one of the easiest methods is the comparison approach.
The comparison approach is a method of house valuation used by most property valuers. It involves looking at properties that are on the market or that have been sold in the last 6 months that are like your house in almost every way. The property you compare your house to must be of similar size, location, age, and condition.
To calculate the value of a house this way, you will need at least 3 comparable properties. You can find these by looking at real estate sites or local newspapers. You’ll need the size in square metres of each property and its sales or listing price. You’ll then need to then calculate the price per square metre for each. To do this you simply divide the price by the size (in square meters). To visualize, the formula would look like this:
Price per Square Metre = Price/Size
Repeat this for every comparable property you have found and then calculate the average by adding up the prices per square metre together and then dividing by the number of comparable houses you have used.
Once you have the average, all you need to do is multiply this average price by the size of your house. So, to calculate the value of your house using the comparison approach the following formula is used:
House Value = Average Price per Square Metre x Property Size
This is an easy way to get an estimate of your house’s value. If you are not keen to do any math for yourself, consider one of the other options below.
Use an Online Valuation Tool
By using an online valuation tool, you can get a valuation of your house with little to no cost. An online valuation tool uses what is called an Automated Valuation Model (AVM). This is a computer-based algorithm that uses data and statistics to provide an estimate of your house’s value.
The estimate is mostly made from market data of local comparable properties and depending on the tool you use you may even receive a report of these properties. This is heavily based on the information that is available in the tool’s database. If there is an insufficient amount of data or if the tool is outdated, the valuation could be wildly inaccurate.
Banks and professional valuers may use a similar tool for their desktop valuations, but as they have access to their own property data and expertise, they can ensure the valuation that has been generated is correct.
Despite the assurance of an accurate and precise house valuation, using an online valuation has the benefit of being fast, cheap and involves little to no math skills on your part.
Hire a Property Valuer
Yes, this might be the most expensive way to find out the value of your property, but it is also the most accurate and precise. There are a variety of different methods to conduct a house valuation and there are many forms they can take. By hiring a certified house valuer and explaining why you need a valuation, they can determine the method or methods to use for your valuation and the form it needs to be delivered as. Both things will determine the house valuation cost. The size of the property and the distance a valuer will need to travel will also add to the cost.
All the above methods can be used if you are after a pre-sale house valuation, but only the valuation by a registered property valuer can be relied on to provide the true market value of the property. A property valuer is also a great option for those in need of a pre-purchase appraisal. You’ll receive a report that is far more accurate than an appraisal from a real estate agent and could give you some leverage for negotiating a lower purchase price for your home.
If you are interested in having a professional and certified valuer calculate the value of your house, then feel free to contact our office. We’d be happy to answer any questions and provide advice on property valuations.