When needing to provide the market value of your Darwin property, the suggestion is usually to find comparable properties. This might be for such things as contesting a land valuation from the NT Valuer-General. In many cases, the best course of action is to seek the help of property valuation services to find these comparable properties and to provide you with a valuation report. This can save you from having to search for comparables on your own and can guarantee you have an accurate market value of your property.

What are Comparable Properties?

Comparable properties are properties that are like yours in almost every way. Ideally, they will have the same characteristics and qualities as the property being valued. This means they must have size, location, and other qualities in common to be comparable.

Property valuers will use these comparable properties to calculate the value of your property. This is called using the comparable sales valuation method.

What is Considered a Comparable Home?

A comparable home is a home, aka a residential property, that is similar enough to another to be used for calculating its market value. To be considered a comparable home, the two properties must have the following in common:

Location

A comparable property must be in the same location. The value of properties varies greatly from place to place for many economical reasons. A property in Darwin would never be compared to a property in Sydney, no matter how identical they may be. The same is true for properties that are within the same state or territory.

A good comparable home would be no more than 5 km away from the residential property that is being valued. This may be hard to achieve in certain parts of the Northern Territory, in those cases, a rural property valuer can use either other methods of valuations or properties that are further away and adjust their calculations accordingly.

General size

The size of the comparable property plays a major part in a valuer’s calculations for your property value. A comparable property must be as close as possible to being of the same size in square metres as the property being valued, otherwise, the valuer will need to take the difference in size into consideration.

For residential properties, the size of the structure itself is what takes priority. Ideally, the size of both land and buildings will be the same for your comparable property.

Number of rooms

It is possible for two properties to be of the same size in square meters but have a different number of rooms. If this is the case, the valuer cannot simply ignore this fact.

The amount of bedrooms can be a deciding factor when a prospective buyer is comparing two homes. As such, the value of the property is affected by the room number. This applies to all types of rooms including bedrooms, bathrooms and living rooms. Homes that are being compared to determine must have the same number of rooms.

Street

The street itself does have an influence on the value of a property. The design of the street, its proximity to busy roads, shops, and transportation. It may not be something we consciously think about, but it matters, and a property valuer will note the street qualities of the comparable and how it affects its property value.

Age and condition

When the property was constructed has an impact on its design, and the materials used to construct the property. The older the property is, the likelihood of hidden health and safety hazards increases. This could negatively impact the renovation potential for knowledgeable DIYers and thus their interest in the property.

Properties that are in poor condition and/or old may linger on the market for longer than others in the same neighbourhood. If they haven’t been sold in quite some time, then sellers may drop the listed price which then alters the sales price. This means that even if the property is comparable in other ways, the lower-than-average sales price makes it an inferior comparable property.

Features

Naturally, homes with different features will have different property values. If there is a feature that is missing from a comparable, for example, your home has solar panels, and the comparable property does not then that is considered an inferior property.

Properties with more features than your own, such as being larger in size and having extra living spaces are then considered superior comparable properties. Both inferior and superior properties can be used in the calculations for your property, but a valuer must disclose this in their report and adjustments must be made to the final value estimation.

The Comparable Sales Valuation Method

To use the comparable sales method to find out the property value of your home, a valuer generally uses about 3 to 6 comparable properties. It is the comparable property sales that the valuer uses. These sales must be from within the 6 months prior to the valuation date. The closer the sales for comparable properties are to the valuation date the better and the more accurate the final valuation report will be.

Once the valuer has collected these comparable properties and has determined that they are suitable, they use the sales prices and the square meter size of each property to find the average price per square meter for properties like yours in the local market. This along with the size of your property is what forms the basis of the calculations a valuer will make to determine the market value of your home.

This method is widely used by property valuation professionals. It is a method that is accepted for many official uses such as proving the value of your property in Family Law Court. If you would like to know more, or if you need to find the value of your home, then why not contact a local property valuer today.