Property assessment is not a science beyond the realms of the average investor and while valuers make it their business to know the ins and outs of their markets, a few simple principles can help you ensure that you're on your way to paying the right price for the right property - right from the get go.
1. Be realistic and objective – don’t let your heart rule your head. This is business.
2. Research your market – This is the cornerstone of understanding value. Take your time, talk to local agents, go to auctions and jump on the internet. Informed decisions pay off.
3. Carry out a thorough inspection – measure the home's dimensions, turn on the taps, look at the stumps and walk the boundary. Look for every positive and negative you can.
4. Seek independent information – estimated projections on rising values and rentals from the organisation selling you the property are worthless. Seek actual information from local independent professionals and try to substantiate any information yourself.
5. Position, position and what was the other thing? Never ignore the basics. If it’s on a train line or next to an arterial road, it will be trouble. Look at the surroundings.
6. Compare like with like – try and find comparables as similar as possible to the subject. These will be your beacon.
7. Think like a local – if everyone in the street wants lock up car accommodation, make sure your property doesn’t buck the trend.
8. Watch for overcapitalisation – a half court tennis court may seem like a good idea, but unless the owner is raising a Tomic, most buyers will find it next to worthless. Be honest about what it really adds.
9. Think land, dwelling, ancillaries – breaking down the property into its parts can help you see the whole.
10. Use recent comparables – if you’re using sales from a year ago when the market was booming, you are relying on false evidence. Keep it current.
