Apples Are Good For Your Figures
“Whether you are a buyer or seller, having a sound knowledge of property values will remove the fear of being taken advantage of and making costly mistakes”
You may recall I wrote a blog regarding the true meaning of median house prices and how confused many people were with this measurement when comparing it with the value of properties in their area ? Well, don’t worry too much because the only statistics that really matter are comparable sales. A detailed analysis of comparable sales will give you an extremely accurate measurement of the current value of your property…it’s as simple as comparing apples with apples!
Think about it. When you go to the supermarket and buy apples, the only difference in the price of the apples you buy is their weight (assuming they are the same variety) . The value of property is determined by the land area and what improvements are upon it. Sure, it is more complex but the principle is the same . Land values are relatively simple to calculate because there are no improvements to take into account. Apartments on the other hand are generally driven by size and aspect. Houses are far more complex because there are more variables which might explain why two homes that look identical sell for different prices. For example, it could be that the land areas are different or one has been renovated or is in a better location.
I am sure you have all over heard friends discussing what a property sold for on a square metre basis ? This is termed comparable sales analysis. Agents do it all the time often in their heads, they are simply comparing one sale with another like property, not on the price paid but on the price paid per square metre. It is only then that you can get an accurate measurement of comparative value – statistics don’t lie and naturally, the greater amount of data you compare it with, the more accurate your analysis will be.
Herein lies the problem, getting the data. The data that agents use is owned in most instances by the REIV. So unless you are a member, you will not have access to this data and believe me the data is good – it contains everything you need to know, land areas, images, floor plans, aerial views, when the property was last sold etc. As a buyer, some agents will assist you by supplying this information ( if you ask for it ) but unless you can validate it, how are you to know whether you have been given the right sample ? I have no doubt that there will be sales contained within the sample that are relevant but what good is that if all the other sales are not ? When selling, most agent’s appraisals do include sales data but very few agents actually provide you with any analysis. There are some companies that collect data which the public can purchase but the samples are usually poor because like you, they can’t get the data either.
So, what is the answer ? Ask the agent to provide you with one comparable sale that best matches the property you are planning to buy or sell and do your own analysis. The alternative is to call me for independent advice because we have access to the same data agents have.