One of the biggest mistakes property buyers make is relying solely on the seller's asking price. A property's asking price does not necessarily reflect its true market value.
Understanding whether a property is fairly priced requires research, analysis and objective comparison.
Compare Recent Sales
The best indication of value is what similar properties have recently sold for.
Compare:
- Number of bedrooms
- Number of bathrooms
- Stand size
- Building size
- Location
- Condition of the property
Recent comparable sales provide a realistic picture of current market value.
Evaluate the Area
Location remains one of the most important factors influencing property value.
Consider:
- Schools
- Shopping centres
- Public transport
- Crime levels
- Future developments
- Employment opportunities
Assess Property Condition
A property may appear attractive but require significant maintenance.
Inspect:
- Roof condition
- Electrical systems
- Plumbing
- Damp issues
- Structural cracks
- Boundary walls
Repair costs should form part of your purchasing decision.
Consider Rental Potential
Investors should compare purchase price against expected rental income.
A property generating strong rental returns may justify a higher purchase price.
Get Professional Advice
Property practitioners, valuers and bond originators can provide useful insights into market values.
A professional valuation may prevent costly mistakes.
Watch for Overpricing
Warning signs may include:
- Property listed for an unusually long time
- Price substantially higher than nearby sales
- Multiple price reductions
- Lack of buyer interest
Conclusion
Buying property is one of the largest financial decisions most people will ever make. Taking the time to compare market data, inspect the property and understand local conditions can help ensure that you pay a fair price and make a sound investment.
