What is an appraisal?

An appraisal is a real estate agent’s expert opinion on what your home could sell for at the time. To decide on a value an agent will consider recent sales of similar homes nearby, the current state of the market, and your home’s appeal to buyers. They will also consider factors such as your home’s suburb, location, condition and land size. 

Agents provide appraisals as the first step toward marketing and selling your home. 

• Appraisals are provided for free by agents.

• Appraisals are usually provided as a range. For example, your appraisal may say that your home could sell for $1 million to $1.05 million. 

• Agents should always visit your home before providing an appraisal to get a clear understanding of its value. 

• Real estate agents often offer appraisals as sales tools to convince you to sell your home with them. You‘re not obligated to choose a real estate agent to sell your home after they provide an appraisal. 

• It’s a good idea to get multiple appraisals so that you can be sure the price indication you’ve received is accurate, and so you can meet several agents. 

• Don’t choose the agent who gives you the highest price estimate by default. It’s more important that you trust the agent to sell your home. Agents have been known to offer unrealistically high appraisals, then point out issues with the property after listing to get you to reduce the price. 

• Appraisals must be provided in writing not verbally. The written appraisal should include sales of comparable homes in the area and an explanation of how the figure was calculated. 

It’s important to take care when assessing appraisals and to do your own homework. The agent should provide a list of comparable sales in the area and analysis of where your property sits in relation to them. They’ll compare land size, property condition, number of bedrooms, property features, location and everything else that could affect the property’s sale price. 

Think about whether their assessment makes sense and seems accurate. Check homes.co.nz for other recent sales in the area to see if they’ve omitted any relevant properties. Get several appraisals and if one is much higher than the others, that can be a red flag. 

Ultimately it’s your job to ensure the appraisals are accurate so take care and take your time - don’t let yourself be rushed into choosing an agent or selling if you’re not ready. 

Market appraisals are a subjective assessment of how the market could perceive the value of your property, performed for free by a real estate agent. They help sellers set their asking prices and should be used as a rough guide. 

Valuations are different. They are a less subjective, more detailed assessment of a property’s potential value performed for a fee by a qualified and registered valuer. To complete the valuation your valuer will visit the property and conduct a thorough market analysis, which should include looking at market conditions and analyzing recent comparable sales. 

• You’ll receive a full valuation report, which includes a detailed breakdown of how the valuer arrived at their given amount. 

Valuations are usually used by buyers to either figure out whether a property is worth buying, or to satisfy the requirements of their lenders. With that said, they’re also used by sellers to help set asking prices (especially if they’re selling privately).