Updated 9 April 2019
You’ve been eyeing an upgrade because the kids are getting on your nerves. Or thinking about downsizing to a smaller single level home but preferably one with a view of Rangitoto and close enough to Mission Bay beach for the daily beach runs or walking distance to the St Heliers village to do your errands.
That means you are ready to go on the market and sell your current home.
Of course, before going to market, it’s natural to want to know how much your home is worth and how much you can bank from the sale. Then you can work out your budget for your next dream home. All very sensible.
What's My House Worth?
There are a few ways to find out what your home is worth:
- ask one (or a few) real estate agents for a free market appraisal
- pay around $1500 (ouch!) to engage an Independent Registered Valuer
- get a free online estimate from TradeMe, Homes.co.nz or Oneroof.
Or do all three. (Just don’t look solely at CV – I’ve covered ‘why not’ extensively here.)
Now you may start to wonder:
- why do all of the values seem to differ and sometimes so wildly?
- should I trust the agent who gave the highest appraised value?
The short answer to the first question is this.
“Value is simply an opinion.” Seriously.
Things that have memories and stories are worth more to you than to others who attach no meaning to them.
Just like how my house has this absolutely atrocious painting by my husband on display (proof is in the picture). To me it’s special because he said it was the sunset he saw while taking Rambo out for his first walk at Churchill Park but to others it would be completely trash.
I am sure you now understand instinctively why ‘Value’ is such an individual & personal opinion – what something is worth to you or your family can be completely different from what it’s worth to the next person – especially for luxury property or real estate (which many homes in the Eastern Bays and Remuera are) and other things that hold an emotional connection.
Nobody can tell you accurately what your property will sell for.
I do not have a crystal ball. And neither does the next agent, independent valuer or the automated valuation websites. Nobody can pinpoint exactly what somebody else’s personal and subjective opinion of value of your house may be. At best they can make an educated guess. (Or lie about it.) This is the reason why agents do not offer guarantees to buy your property for the specific appraised price.
What appraisals do (similar to independent valuations) is to look back at comparable sales of similar homes in your area, and based on those comparable sales and the characteristics/condition of your home, come to a ‘best guess’ of what it can possibly fetch in the market today assuming that there is a similar buyer out there. In short, it is based on historic figures and incorporates certain projections and assumptions.
To make things more challenging, other than the home itself, there are other variables to ‘value’. Here are some examples:
- Neighborhood characteristics (Are your neighbours houses’ equally nice and tidy? Is it a tree-lined street and close to parks? Some streets are better than others for e.g. Kesteven Avenue, Riddell Road and Kildare Avenue are popular streets in Glendowie)
- Zoning classification and description under the Unitary Plan. Is there potential for future development and will buyers value it? Will the sea view towards Brown Island and Rangitoto be unobstructed or likely to be built out by intensification of land use?
- Available public or private utilities like good schools (Glendowie Primary, St Heliers School, Double Grammar Zone etc), great shopping areas (e.g. St Heliers Village) etc
Because so many factors play into a home’s appraised value, there is huge subjectivity in the process. What matters to one buyer may not matter at all to another (or becomes a downside). For example, some buyers love old villa styles while others prefer more modern architecture. One buyer’s circumstance (for e.g. new baby on the way or job change) may necessitate him/her buying a house at THAT time even if it means paying more (sometimes, a lot more). However, that buyer may not exist for your home when you come to sell.
Ultimately, you need to remember this. In the sale of your home, there are only 2 opinions that matter: Yours as the seller, and that of the best buyer.
So should you pick the agent that gave the highest appraised price?
As with all things in life, it depends.
As I explained above, we as salespersons take an educated guess as to what your home will sell for based on comparable sales and what we see in the market.
(So if you find any agent who promises that he/she will fetch you that price no matter what, what you should immediately do is to sign a listing agreement and get a guarantee with that agent covering that promise. Otherwise, what’s the value of that promise?)
Back to the question. If you have received a few market appraisals and there’s an agent who has given you an appraised price that’s so much closer to what you want and is above, or way above, others, should you pick that agent then?
What I would suggest is this:
- You need to look closely at the comparables the agent has provided and see if these are similar to what the other agents have given.
- Are the comparables the same? If they are, ask the agent to explain how he/she arrived at a much higher price than the rest despite having the same comparables. Is it because your house has stunning expansive sea views or it backs onto Churchill Park or that the location is literally a stone’s throw away from St Heliers village?
- If the comparables are different, is there any reason whereby the agent picked those comparables and are they really similar to your house or is it a bit of a stretch? Be your harshest critic here – it is your most valuable asset and you will naturally want the most. But you need to have an accurate and realistic understanding of where your property stands.
And even then, it is still a guess!
What really matters and what you should do.
I will repeat what I’ve said above. In the sale of your home, there are only 2 opinions that matter: Yours as the seller, and that of the best buyer. Not the agents. Not the free valuation website. Not the independent valuer.
What you should focus on is therefore finding the best buyer. And to find the best buyer, you need to maximise the buyer pool and therefore create buyer competition.
When interviewing your agent, ask these questions:
- How do they plan to create competition amongst buyers for your home?
- How do they plan to present your home in this digital age and the current market to obtain maximum possible interest?
- Are they planning to use social media and search engines to drive interest? How so? Have they personally used them and spent lots of $$ on such advertising and understand intimately how it works?
- Do they have the ability to change and adapt advertising copy on a constant basis to maximise eyeballs?
- What are they going to do to attract as many qualified buyers as possible to your property?
- What are the recommended most efficient and cost-effective marketing channels currently available?
- How are they going to help those buyers create an emotional connection to your home? Are they going to be personally present and deal with each and every objection rather than simply push the buyer to the next house or pass you on to their associates?
- Have they got the multiple linguistic capabilities to deal with a wide range of buyers so that you capture every single possibility?
Agents who have over-appraised typically have lots of properties on their books because they know some will sell (eventually). This is what we call “buying the listing”. Will that be yours? It doesn’t really matter to them as the fact that a percentage will sell has already been factored into the calculations.
You can fully expect significant drop off in interest/effort once you have signed the listing agreement or if your property fails to sell in the auction campaign. Why? This is because they need to focus on getting more listings and the focus of open homes is likely be to meet potential vendors (hopefully more realistic than you).
Smart innovative agents will position themselves as ‘competition creators’ rather than mere ‘property valuers’. You will want to see them as marketing experts whom you hire to run truly innovative campaigns and maximise your sale price when it comes time to sell your home.
Why do agents offer ‘free appraisals’ then?
Offering something for free is effective because it engages the ‘law of reciprocity’ – you as the homeowner will feel indebted to the agent for providing this ‘free service’ and are therefore more likely to use them when it comes time to sell.
PSA: I offer free appraisals because I truly want to help you understand the value of your home and you deserve more than one opinion. Whether you go with me because of this ‘free appraisal’ is not important – and frankly I will be disappointed if that’s the only reason!
I focus on offering value by answering questions like:
- How to create competition amongst buyers for your home?
- How to present your home to obtain maximum possible interest?
- When is the best time to sell?
- What renovations add the most value prior to selling?
- What method of sale (Auction, Tender, Asking Price) will secure the best possible price in a reasonable amount of time?
All the best in your sale. I look forward to be of service!
Found this post useful and have more questions?
Very few real estate agents have a legal background. Work with someone who understands the ‘fine print’ so that you don’t have to. Better still, work with someone with a unique marketing campaign to maximise your chances of success.
Do not hesitate to contact me for a no-obligation discussion over coffee on your future plans to either buy or sell.