There is no short answer or hack to this one. You’re about to spend a considerable amount of money and you need to have done your research.
Your options are as follow.
- Pay someone to help you advise you what it is worth.
- Offer a price less than the asking / estimated price and hope it is right, or
- Follow the Apartment Hunters MAP buying process where you look at many apartments and record their values and how well they meet your needs to understand its value to you.
If you engage a valuer to advise you, their valuation process is to compare the apartment you wish to buy, to other similar apartments that have recently sold and then adjust the sale prices for differences between them. This is exactly what the Apartment Hunters MAP process does. In fact, the MAP process is better than a valuer as it assesses the value specifically to your needs and not just the general public.
To use the MAP process, head to your book and read through the instructions on creating your profile. Your profile can be used to compare similar apartments, their relative value to you, and their asking price against their physical attributes. This process is as simple as visiting many apartments and comparing them in your book.
If by chance you’ve made it this far without a book, go to www.apartmenthunters.com.au to get it delivered free of charge.
During the process of apartment hunting, there’s a good chance you will google “what is my apartment worth” and type in the address so it might help to discuss what you will find and how to interpret it. There are many web sites and apps all too happy to posture a view on what an apartment is worth.
The way they calculate an apartment’s value is by using a multiple regression analysis which analyses a number of sales and compares their quantifiable features like number of bedrooms, bathrooms, car spaces, size, suburb, location, and date of sale to the sale price. It then weights different features depending on their correlation to value and works out an algorithm to apply to the subject apartment to estimate a value.
It may also provide a confidence range which ratesthe strength of correlation of the sale prices to the quantifiable metrics.
The algorithm however cannot process unquantifiable data. Things like natural light, views, overlooking, floor plan configuration, size of the living space or bedrooms are not included in the calculation at all.
There is no substitute for spending time looking at lots of apartments and using the Apartment Hunters workbook to record and analyse them against your criteria to understand what an apartment’s value is. Even expert valuers often do not agree on an apartment’s value as there is an element of subjective judgement. Some say auction is the ultimate judge on an apartment’s value.
This is pretty true but if you auctioned the same apartment each month for a year, there is a good chance you would see 12 different (but similar) sale prices. That is why an agent provides a value range because quiet literally the value lies within a range and not a single number.
