Most members of the home owning public will be aware that real estate agents offer “free appraisals”. And anyone looking to sell will likely have commissioned a handful of appraisals to compare their potential sales range. But the longer I spend in the industry, the more I ponder what role do appraisals really play in a property sale?
In my former career, as a registered valuer, I was essentially carrying out the same job as a real estate agent, conducting free appraisals. It took six years to gain that qualification and it is with some deep sole searching and great disappointment that I realise, it is nothing more than a guessing game.
This month I look at what a market appraisal should be and what the best information is for an owner to draw from them.
What is a market appraisal?
The key to the market appraisal is in the word ‘market’. Unlike an RV or electronic assessment, such as Homes.co.nz, a market appraisal is a snapshot in time.
‘The market’ is made up of all the buyers looking to secure a property at any given time. These buyers are the ones who will determine the ‘current market value’ and this will be based on their experience of researching and offering on similar available properties. What I know is that what a buyer thinks a home is worth at the start of a process, and what they end up paying, can be two very different things. It is our job as agents to use a well-considered process run over an appropriate timeframe coupled with thoughtful dialogue to move buyers to the top of their range, achieving the best possible price for our vendors.
Asking an agent “what might my sale price be?” could open you up to the possibility that the agent will simply tell you what you want to hear.
So, what is your market?
Your market is a group of active buyers that are likely to consider your home. Your market may be first home buyers, families, downsizers or investors. It is important to understand what is important to these different groups and present your property with this in mind.
Once at your property, good quality conversations and questioning will engage buyers and guide them through the process long before a discussion on price is required. Building emotional attachment and keeping buyers engaged across the campaign is key to driving an above market result.
What should I really be getting out of the market appraisal?
A market appraisal is your battle plan and should have a strong, strategic foundation. More important than the agent’s ‘best guess’ on what your property might sell for is their understanding of your market, and the strategy for getting the very best out of it.
The key questions for you to ask any potential agent are;
‘Who is my target market?’
‘What are the things I can do to make my property appeal to my target market?’
‘What activities/channels do you use to create an audience for my home?’
‘Once you build the audience, how are you going to create competition?’
As important as plan A, ‘What is your plan if my property doesn’t sell at the Tender/Auction?’
A great agent will offer a tailored approach and because of their considered approach be able to answer these questions with ease.
As part of the interview process, request examples of vendor reporting from recent campaigns. This should clearly demonstrate calls made to active buyers, private inspections, and open home feedback. The key information to look for is commentary from buyers as to why they like/dislike a property and what they would be prepared to pay in a dollar amount. This information is ‘market feedback’, far more important than an agent’s opinion on price, and imperative for making informed decisions come tender or auction day.
It is understandable that in the absence of a previous relationship with an agent, owners will make decisions on who the best agent is often based on a potential sales price alongside costs to sell and commission. Overinflated sales ranges and low commissions are what we call ‘buying the listing’ – a false economy at best. But buyers care about none of this. Therefore, choosing the right agent to work with your buyers, and provide you with thorough feedback, should factor above all other considerations.
The Wellington Market
We are seeing some great energy in the market of late with sales volumes and prices coming off their lows. With more certainty around interest rates, buyers are happy to engage again. But they are conscious that the market has been volatile, and the myth that property prices always rise has been busted.
The shift to Auctions this year is really paying off for our clients as buyers love the transparency of the process, offering without fear of overpaying and competing to WIN.
Please feel free to call and chat to us if you want to hear how auction can work for your property in the current market.
June Auction Success
Wellington Market Quick Stats
What’s on this July in Wellington?
Neil deGrasse Tyson – TSB Arena, 2nd July 2023
Whether you’re a science enthusiast, a student, or just someone who’s curious about the mysteries of the universe, this is an event you won’t want to miss. You’ll get a chance to hear about Neil’s latest research, learn about the latest discoveries in space exploration, and get up close and personal with one of the most exciting scientific minds of our time..
Matariki Ahi Kā, Wellington Waterfront, 13th – 16th July 2023
Come and enjoy a spectacular, free, whānau-friendly experience courtesy of Wellington City Council. Matariki Ahi Kā runs 13–16 July from 6–9pm on the Wellington waterfront. Share food each evening at the kai court and enjoy an immersive waterfront walk celebrating our history.
FIFA Women’s World Cup, Wellington Regional Stadium, 20th July – 20th August 2023
Every four years, the FIFA Women’s World Cup™ showcases talent from 32 countries across the globe. This is the largest women’s sporting event in the world. There will be 64 matches in four cities in Aotearoa New Zealand – including nine matches in Wellington