If you’re in the market to purchase a property, or have purchased a property in the past, you’ve at some point come across a Property Report.
Property Reports are provided by your mortgage broker, your bank, or a research site (such as CoreLogic or Price Finder). The report provides a range of information on the property, namely:
- Land information
- Estimate or a price range for the properties perceived ‘value’ in the market.
- A history of recent comparable sales
- Comparable properties currently listed in the suburb
- Sales results for the suburb in which the property is located.
A lot of this information is useful for buyers, however one piece of information you take with the grainiest of salt is the estimate of the property’s market value / price. This is often presented as a range, not an exact value. Now, the reason that we want to shine a spotlight on this estimate is because more-often-than-not, it’s one of the reasons why Buyers fail.
Why? Because the estimate doesn’t take into account two critical factors…
- Is the property going to be purchased under competition and how many buyers, if any, are looking to buy that property?
- Is that competition is going to occur inside or outside of an auction environment. One of the major frustrations frequently expressed from Buyers that relied upon a Property Report to guide value price, is that they are unsuccessful in the pursuit of their ideal property. Or, they have paid too much for the property and ended up with a bad experience.
When researching and assessing the market value of a property, below are three important activities we conduct to give us an accurate range to provide our clients:
- Look at recent comparable sales in the report – use the property report to identify the three to five most comparable property sales (sales by property type and location), then rank the property you wish to buy against these properties in order.
- Ask the selling agent to give you their view on comparable sales – The selling agent provides the seller with their own comparable sales to arrive at a price guide. Ask the selling agent for these comparable sales. You can compare them with your comparable sales, as well as get an indication of the sale price the agent is wanting to achieve.
- Get an idea of how much buyer interest (competition) there is – if there is a large pool of serious buyers interested in the property, then expect to add a premium to the initial value you placed on the property when comparing with recent sales. You may also need to add a further premium if the property goes to auction, as auctions typically intensify the competition between buyers.
Overall, property reports provide very useful and valuable information, however you should not rely solely on property reports when researching a property and determining its market value.
If you are purchasing a Sydney property and would like an expert opinion or advice, get intouch with the team at Cura Property.