There are two reports you can get to help you understand how much what your home is worth.
1. Market Appraisal
Agents typically create an appraisal for your property as part of the pitching process when you interview them about selling your home or to encourage you to consider selling. You’ve probably seen flyers in your letter box from local agents offering to tell you “what your home is worth”.
An appraisal is usually a printed report, these days if the agent is more tech savvy you get a digital report. The report identifies the key style and features of your home (type of building material, land size and number of beds, baths and car spaces) and compares them to other properties that have sold recently that match the criteria as closely as possible in the same market.
The report then combines that information with the agents own knowledge about selling in the local market, and suggests a price or, more commonly a price range that the agent believes can be achieved using their recommended sales and marketing methods.
Ask multiple agents for an appraisal and you will likely get several different prices across a range. How can that be? Surely only one is right?
The variation is due to both the experience of the agent based on the types of homes that they have used to compare with yours and their different selling methods. If your agent specialises in selling say 4 bedroom family homes, he or she may have captured sales from surrounding suburbs, while another agent may have compared your property to both three and four bedroom homes.
The thing to understand about an appraisal however is that it is an estimate – a line in the sand – that can be influenced by both the agent’s behaviour and how the market is performing. If you're every unsure on how they have arrived at the figures provided you could always ask for a Comparative Market Analysis (CMA) which will detail the exact properties used in comparison when determining pricing your home.
2. Automated Valuation
An Automated Valuation is a data generated report that uses algorithms similar to those used by banks and property valuers to determine the “value” of your home.
The value of your home is different to its final sales price. The value is the amount that most banks and lending institutions in Australia will lend upon under normal financial circumstances. Because of this, the Automated Valuation of your property will in most cases be lower than the price range stated by the agent (banks being conservative creatures after all!).
The free valuation report that you can generate yourself or have generated by an agent is unlikely to be identical to the final valuation your bank does which will be carried out by a valuer. Every bank has different risk and lending criteria which impacts on their final valuations. Plus after the negotiated price has been accepted, the bank will also take into consideration what the market was willing to pay.
But if you are an anxious seller, it can be helpful to know what your automated valuation figure is if only for the security of having an understanding what the bank thinks your home is worth at that point in time.