Whether you’re buying, selling, looking for a refinance a home loan or just curious, knowing the value of your property is important for a variety of reasons. Not only does it help you make informed decisions about buying or selling, but it is also useful in determining how much you should insure your property for. From estate planning, loan negotiations, mortgages, and lines of credit, awareness of your property value can go a long way in protecting your investment. If you’re unsure of where to get started, we’ve covered the basics of property valuation in this article. Our Melbourne Mortgage Broker, Emmanuel, gives his tips.

What should you know before finding the value of your property?

It is useful to know these terms before you start doing your research.

Days on market

As in the name, this refers to the average number of days it takes to sell a property in a particular location. This is a good indication of the level of demand in any area, and will also give you an idea of how long the entire process might take.  

Appraised value vs. market value

The appraised value is the price assigned to a property by a professional appraiser – be it a bank, a real estate agent, or a government tax assessor. In contrast, the market value is how much a buyer is willing to pay for your property.

Appraised values may be conservative (especially during a bank appraisal). The market value is the appraised value plus or minus an adjustment for risk and potential (like demand). Keep an eye on market demands to get a market price higher than the appraised value.

Median house prices

This refers to how much a mid-range house is worth in a particular suburb. While this is a good place to start, this might not be a good indication of how much your house is actually worth, as there are a variety of other factors that determine a property’s value.

high angle shot of suburban neighbourhood with double-story houses and landscaped lawns and gardens

Auction clearance rate

The auction clearance rate is a good way to assess the current demand in the housing market. This indicates the percentage of properties sold at auction on any given week or month. A good auction clearance rate is at least 70%. The higher the rate, the higher the demand. 

How do you find the value of your property?

  1. Check recent Rich Property (RP) data
  2. Look at similar properties and sales
  3. Compare property features
  4. Arrange a property valuation

When would I need a property valuation?

A property valuation is useful when you plan on selling your home and want to determine its fair market value. It is also necessary if you are refinancing your mortgage or taking out insurance and need to determine the current value of your property. Life changes like a marriage or divorce might also require a property valuation. 

What is the difference between a property appraisal and a property valuation? 

While appraisals and valuations are similar in that they give you a fair value of your property, an appraisal is more informal and a valuation is a written report. An appraisal is usually conducted by a registered real estate agent and is usually a guide to setting a price for your home.

A valuation, on the other hand, is a comprehensive legal document that stands in court as a precise value for the property. Valuations are conducted by sworn valuers, and are usually done for a fee. A valuation lists every aspect of your property before setting a fair price. 

Market valuation vs. Bank valuation 

A market valuation is conducted when it is time to sell or buy a home – this denotes the value of your property in the real estate market. This valuation is greatly influenced by current demand and supply in your area. A bank valuation is usually conducted by bank officials for refinancing a mortgage – it defines how much a bank is willing to lend against your property. This is usually more conservative than a market valuation as it is not as influenced by local demand. 

How do you calculate the value of a property? 

Calculating the value of a property involves weighing the following factors: 

  • The size and location of the property 
  • The number of bedrooms and bathrooms
  • The quality of fixtures and fittings
  • The condition and maintenance cost of the building 
  • The architectural style and historical importance of the property 
  • Ease of access and proximity to amenities 
  • Local council zoning and other planning restrictions 

Check recent Rich Property (RP) data

Rich Property (RP) data is a detailed report that has 20 years’ worth of data collected by CoreLogic, a property research company. This is a subscription service that gives you access to a wealth of information about properties in your area. This is a reliable source of market and appraised values, and demand trends of the local market.

The RP data has a comprehensive list of recent sales, property performance, and suburb profiles that will help you get a good estimate of how much your property is worth.

If you’re looking for more information, contact us for an RP data property report for your suburb.

Look at similar properties and sales

Get a feel for the market in your area by looking at similar properties and sales in your suburb. Look at properties within a 2km radius sold in the last six months. Compare properties in terms of locations – how far are they from schools, supermarkets, and transport centres? What does the square footage look like? How many bedrooms and bathrooms does the house have? Measure these metrics against your own property to estimate how much your home might be worth.

Compare property features

Next, compare your home to recent sales – is your property superior or inferior? Take care to be objective here; if you find it too difficult to compare, ask a friend to help. Compare the living area, parking, views, the standard of furniture, and the kitchen and bathroom features. This will help you come up with a more accurate number.

Arrange a property valuation

Reaching out to experts is a fool-proof way to get an idea of how much your home is worth. Emmanuel from Loanscope says, “A reliable professional valuation is helpful to both buyers and sellers as it reduces the risk of overpaying and undercharging. A valuator will also help you understand the weaknesses of your property so you can make improvements before putting it on the market.” It is also crucial to get a property valuation before taking a call on loans.

Final thoughts

Making smarter property decisions is important to get a higher return on your investments. Do your own research before reaching out to a valuator so that you have an idea of what to expect. Have questions about the valuation process? We’re here to help! 


Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

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Emmanuel Guignard (MBA)
Director & Principal Mortgage Broker
With over 15 years’ experience in the finance industry and a recently completed MBA in Financial Planning, Emmanuel leads the broking team at Loanscope. His experience includes working with a wide range of property investors, from first time buyers to investors with large property portfolios. This includes handling complex applications involving trusts, company structures and self-managed super funds. He also operates as a qualified mentor to other mortgage brokers via the FBBA mentor program.
Emmanuel Guignard