Hi All,
Just a quick question to everyone to see if anyone has some simple yet effective ways of determining Market Value for properties.
Consider an example: I’m surfing the property sites on a Sunday night at 10pm (I don’t have a life – or else I enjoy the game too much) and I come across a property which sounds good but I need to do some calculations to make sure. I need a way of determining Market Value for properties in this area, an area which I previously haven’t been looking at before.
What is a good way of doing this?
Hey Tom,
The easiest way to get a really rough idea of market price is to use something like http://www.homepriceguide.com.au This will give you 3-4 month old data but it is interesting to see comparative prices. The other way is to call local agents (4-6) and ask what they have similar to the one you found. The last stage then is to go pound the pavement and have a look around. You never know the next door neighbour could be an avid junk collector or any number of other problems could physically challenge the property. Don’t be put off though. Try and solve the problem.Enjoy
AD [:0)]
(Andrew)“”Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world.”
Albert EinsteinThanks AD, but I was more looking at the situation where you come across a property and you need to quickly decide whether or not to spend time/money looking at it as a possible IP. (i.e. How do you determine Rental levels for this area, how do you determine Approximate Market Value for the area, etc).
I understand the usage of a Home Price Guide report once you have decided to pursue a property, but it is the actual initial step that I was asking about.
Thanks.
PaulI know it sounds simplistic, but here is what I’ve been doing:
1. Check estate agents websites (both for sale and for rent).
2. If an area could be worthwhile, pop into local real estate agents and ask them for a rental list (for details of rent) and look on their window for for sale properties. Also talk to agents.
3. When you’re really serious and have zeroed in on an area, pay for a report of recent sales in the last year.
In other words, I’ve been researching areas, then researching individual properties, in that order.
Peter
Hey TJ,
Mate I understand what you are after but I couldn’t say that there is a fast and safe way to purchase property. IF you know your market well I believe you can jump on a bargain using prior experience. When you are talking about new markets I do not know any way that you can do a quick appraisal that would not sacrifice your Due diligence. I would rather walk from a deal I was uncomfortable with rather than maybe (stress maybe) pick up a bargain. There is always another property around the corner and I would never go without my process to ensure a good buy.
Hope this helps.Enjoy
AD [:0)]
(Andrew)“”Imagination is more important than knowledge. Knowledge is limited. Imagination encircles the world.”
Albert EinsteinIf you know what the rent is, divide this amount by the yield and this will give you the “purchase price”.
Example:
Rent is $200pw = $10,400 p.a.
$10,400 / 4% = $260,000
$10,400 / 5% = $208,000
$10,400 / 6% = $173,333
$10,400 / 7% = $148,571
Of course you will have to decide on a yield factor (depending on location and type of building), but it will give you an indication of what the property should be worth ballpark.If you know the rent and the price, divide the rent by the price to figure out the yield.
Example:
Rent is $175 pw ($9,100 p.a.), asking price is $120,000.
$9,100 / $120,000 = 7.6%Hope some of this helps.
~ better to die on your feet than to live on your knees ~
Thanks to everyone for their replies.
This is what I am currently doing: I have selected an area within the City I live (a very large area), and I have been researching the rental prices and the property sales for the last six months. But of course this doesn’t help me when I suddenly find a very interesting possible property.
So what I try to do is simply, do a search on any properties in the immediate area for Rents and other Property Sales. I determine like for like in terms of the properties, and I hope that I come up with at least a small number of similar properties in the same area.
I then reduce the median asking price by a small percentage (who pays the asking price
, and that gives me market value for an unknown area. The rentals are done in a similar conservative fashion.Hopefully after all this I can feel comfortable with an approximate figure for both MV and Rent Return.
But as you can see, to look at an unknown area requires quite a bit of investigation and calculations.
All this just to save a buck
, I was just wondering if others had other ways of doing it….Happy Hunting.
TOm,
so you want simple and effective? it may appear complex but once you’ve got it downpat, it works you’ll be doing this subconsciously.
Farm your area, once a week. very simple &effective. choose an area of roughly 20000-3000 houses. every week, there should be 7-10 min new listings in that area.i just focus on one suburb and one only. i know every listing inside out. this is the steps i take:
every weeek, i go to that area and spend 1-2hrs driving around noting the following info:
1. new listings with descriptions (e.g, lowset, brick, 3brm, ensuite, 1garage + 1carport etc). if u have digital camera, take photos.
2. write down date approx date of new listing and agent
3. write down what’s sold and the date sold(approx)
when you do these 3 things, over time you’ll become the master of your suburb. you’ll know more than the (average) agents. you should know:
1. how long the property has been on the market. if it’s been more than 4 weeks, you have either a motivated seller or unrealistic seller
2. how long did it take to sell. if a property sells within the first week, you know that it sold very clsoe to asking price. this is either a steal (u’ll know) or fair market value.
3. if it took 4+ weeks to sell, then it probably sold for $15k-$25k below asking price on a $280k house.you can always ask teh neighbour then subtract about $5k from the amount they tell you.
4. because you know teh area so well, you’ll autmatically know what’s a steal and what’s not.
5. you should be talking to agents and letting them know you’re in teh market to buy properties on an ongoing basis. make sure you “farm ” agents as well. e-mail them weekly/fortnightly. meet them every 2-4 weeks and talk about market action. when the conversation allows you to mentione recent sales and new listings and properties that have been on the market forever, they will know that they are really dealing with an investor. The right agent will not hesitate to contact you when the right house at the right price comes on the market. don’t give them money for it. buy them lunch at a restaurant (relationship marketing).
5. get onto the following websites and subscribe to new listing (Sale and rental) service:
realestate.com.au & proeprty.com.au
visit propertypage.com.au on a daily basis and check for new listings in your area.(they don’t have free subsrciber service)
Once you do this on a weekly basis, u’ll also have very strong negotiating power when writing offers. the agent won’t be able to challenge. he/she alreadys knows that you are aware of what’s going on in the market.
hope this helps
, and that gives me market value for an unknown area. The rentals are done in a similar conservative fashion.
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