There are many eyes on the rise and fall of property prices. Some are prospective homebuyers, while others are real estate investors looking to expand their portfolios. Though prices are important for a buyer and seller, anyone who already invests in property is more concerned with the current market values of their investments.
What’s the difference between price and value?
Simply put, the price is what a property is advertised as or the amount it was ultimately sold for. This is not always equal to its true value.
The market value of a piece of real estate is the estimated amount a prudent seller and judicious buyer will exchange in the open market for the property when both are fully informed and free of both outside influence and stressors.
For such things as stamp duty, settlements, insurance, and home loans, market value is required.
What affects the price of your house?
If you plan to buy or sell a residential property soon, here are some key factors that could influence your advertised price, offer, and final agreed price.
Location
The famous saying “location, location, location” comes to mind for most buyers and with good reason. The location of a property is perhaps the most significant influence on housing prices.
The closer a property is to central hubs for business, transport, food, and entertainment, the more a buyer or investor is generally willing to pay for it. Of course, other local factors affect housing prices, including the surrounding environment, street type, views, and lifestyle/community support.
Supply and demand
The age-old concept of supply and demand rings especially true in the real estate business. If there is a high demand for property in a particular area and the number of houses available is in short supply, then prices would be high. After all, if something is in high demand, it is seen to be worth more.
If there is an abundance of houses available but little to no demand, prices are set low to encourage buyers and make for a faster sale within the current market conditions.
Condition
Buildings and land rarely stay in the same condition over years of occupancy. This is due to natural wear and tear, environmental changes, maintenance, build quality, and materials, among many other factors.
Properties that have been poorly maintained and are in disrepair with clear signs of neglect can be quite expensive to clean, repair, and renovate. As such, these properties fetch a lower price to compensate for the poor condition.
If you have the budget, it could be worth fixing these issues before selling to raise the price and potentially earn a reasonable profit. Most buyers prefer a move-in ready home and are willing to pay more for the convenience.
Strategy
Many Aussies use a specific strategy when buying, selling, or investing. This may be influenced by the factors above, as well as budget, timeline, personal finances or stresses, and the current market conditions.
When working with professionals, they may offer their own suggestions for strategy according to their expertise and experience. Although in some cases, such as with real estate agents, the strategy they propose is influenced by personal motivations, such as earning a commission.
Negotiations
Negotiating price is a part of most open-market real estate transactions. This serves to finalise the property's sale price before an agreement is signed and the transaction is completed.
Your ability to negotiate, the available information, and the guidance of professionals in your corner will all sway the result of the sales negotiation and, ultimately, the housing price.
How much should I price my house for sale?
If you want to know how much you should be pricing a house before you put it up for sale, it is recommended that you learn its market value. This can be done by calling a house valuer.
They analyse location, the market, the property’s size, comparable sales, and hundreds of other factors to calculate a property's market value accurately. They present their findings and calculations in a report you can use to price your home competitively and use as a resource or guiding document when negotiating.
For more about house values and preparing to buy or sell real estate, speak with one of our valuation experts.