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What is a “Market Appraisal” by a Real Estate Agent? Property Valuation in NZ
6 September, 2023 | Kandice Reilly
A market appraisal, conducted by a licensed real estate agent, estimates a property’s market value. It considers factors like location, size, condition, recent sales, and local market trends. Unlike registered valuations, which are required for legal purposes, market appraisals are often used by sellers to gauge potential selling prices.
Market Appraisals are usually provided free of charge by real estate agents, as part of vendor’s selection process for picking an agent to sell their property.
The Role of a Real Estate Agent in Market Appraisals
Real estate agents are well-versed in the local property market and possess a wealth of knowledge about current trends, neighbourhood dynamics, and buyer preferences. Leveraging this expertise, they assess properties with a trained eye to provide sellers with an informed estimate of their property’s market value.
Here’s a breakdown of the steps involved in a market appraisal:
The process begins with a physical examination of the property. The agent assesses both the interior and exterior aspects, taking note of features that can impact the property’s value, such as layout, age, condition, quality and age of chattels, architectural details, and curb appeal.
One of the crucial aspects of a market appraisal is comparing the property to recently sold properties that are similar in terms of location, size, condition, and features. These comparable properties provide a benchmark for estimating the property’s value within the current market context.
Local Market Insights
Real estate agents have their finger on the pulse of the local property market. They can provide insights into current trends, demand and supply dynamics, and other factors that could affect the property’s value.
The comparable properties may not be identical to the property that is being appraised, so agents make adjustments based on differences such as section & building size, upgrades, and condition. These adjustments fine-tune the estimated value to align with the specific property being appraised.
Market Value Estimate
After considering all relevant factors, the real estate agent arrives at an estimated market value range for the property. This range reflects their opinion on the property’s potential worth in the current market conditions.
Benefits of a Market Appraisal
For property sellers in New Zealand, opting for a real estate agent market appraisal brings several advantages:
Real estate agents possess intricate knowledge of local neighbourhoods, buyer preferences, and market trends, enabling them to provide accurate and relevant valuations.
Market appraisals can be conducted relatively quickly, providing sellers with a rapid estimate of their property’s value compared to the more time-consuming registered valuation process.
Market appraisals offer a more adaptable approach, allowing sellers to receive updated assessments based on shifting market conditions.
A well-informed market appraisal helps sellers set a competitive asking price, which is crucial for attracting potential buyers and maximizing returns.
Most real estate agents will provide a free market appraisal.
Evaluation of the Agent
The process of engaging with the real estate agent to appraise your property can give potential vendors a better picture of how the agent operates, and whether you as the vendor feel they are the right fit to market and sell your home for you.
Market Appraisal vs. Registered Valuation
It’s essential to distinguish between a real estate agent market appraisal and a registered valuation, as they serve different purposes and have varying degrees of authority.
A registered valuation is a formal assessment conducted by a registered valuer who has undergone extensive training, often holding qualifications such as a bachelor’s degree, and is licensed to provide accurate property valuations. In contrast, a real estate agent market appraisal is an informal assessment grounded in the agent’s local market knowledge gained through their experience working in that specific area.
Market Appraisal Advantages
- Provides a relatively quick estimate of a property’s value.
- Conducted by licensed real estate agents who have local market knowledge.
- Offers insights into current market trends and buyer preferences.
- Useful for setting competitive asking prices and devising marketing strategies.
- Typically provided free of charge by real estate agents.
Market Appraisal Disadvantages:
- Lacks the legal weight and formal authority of a registered valuation.
- Real estate agents receive limited formal training in property valuation.
- The accuracy of the appraisal depends on the agent’s knowledge and experience.
- Not accepted by banks or lenders when a registered valuation is required for financing.
As with all property valuation methods, a market appraisal should be considered a tool as part of a wider toolbox of valuation methods. There is no one method that will 100% accurately predict the price that a property will sell for. Information from each tool should be assessed based on both its strengths and its weaknesses.
Market appraisals provide timely, informed estimates of a property’s market value, and can provide valuable assistance to sellers to make decisions regarding pricing and sales strategies. With their local expertise and understanding of market dynamics, real estate agents do play a pivotal role in helping sellers navigate the intricacies of property valuation and to achieving successful outcomes in their property transactions.
Are you looking to sell your property or refinance? Contact Kandice, our trusted conveyancing and refinancing legal expert, to ensure your journey is smooth and stress-free. With her wealth of experience and in-depth knowledge, Kandice will guide you through every detail, making sure you make informed decisions that maximize your return.
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