How to arrive at Replacement Value
Step
1 |
Obtain average value of comparable vacant land sales in your area. | |
| Step
2 |
Take 80% of the value as being your improved land value with with dwelling constructed. | |
| A: Land Value $____ | ||
| Step
3 |
Tape measure outside measurements of dwelling remembering to include upper levels, but exclude patios and carports. | |
| This will
provide sizes. (i) habitable area : (ii) enclosed garage : (iii) verandas, patios, decks, etc : |
Size ___m2 Size ___m2 Size ___m2 |
|
| B: Improvement Value $____ | ||
| Step 4 | Multiply step 3 (i) & (ii) x $675 | = $ |
| Multiply step (iii) x $440 | = $ | |
| Add turnkey - average for 260sqm (Display home standard) | $35000 | |
| C: Special Items $____ | ||
| Step 5 | Add special items ie: pool, sauna etc | $ |
| Step 6 | Replacement A + B + C | |
| Example: Land $180,000 | $180,000 | |
| Krissy Design 170.6m2 x 675 | $115,000 | |
| Patio | $17,250 | |
| Turnkey | $36,750 | |
| Replacement cost | $349,000 | |
| Estimate market value | $315,000 (ie:90% of replacement) |
A house value is always what someone is prepared to pay. The above comparison gives little comfort in a "quiet" market, when some houses may be sold under distress. In such a market, the bottom line real price may be up to 10% below replacement value. Often times, inexperienced real estate sales people can't "read" the market and appraisals may vary by up to $50000. Early 2006 sales show signs of the $400,000 plus range being short in listing supply and prices still rising, and the 5-10 year old $280,000 to $330,000 range in outer suburbs to be in 'oversupply'.
| To double check the market value you arrived at, please consider that traditional cost is like a share or commodity. Real value normally is so the price of a house reflects future ownership benefits, i.e. rental income earned by a landlord or implicit rent saved as an owner occupier or rented out at a 4% return. Rents in early 2006 rose on average $40 PER WEEK and supply of high quality longer term property remains at a premium. Therefor to crosscheck your value apply a 4% return of ie:$250pw rent on the above case study |
In a rising market i.e. Sellers market, buyers will sacrifice real value for higher perceived longer term increases in value. In times of finance leading restrictions, or market correction, valuers may value with greater conservatism. Almost all loans are insured by the lenders against borrow default and valuation is the "make or break" factor. For insurance, use the replacement cost but for realistic value use the Traditional cost. The general rule is over-insure.
To obtain a real
market value in todays market conditions, phone Peter Campbell on 0418 774 663
or Matt Campbell on 0417 008 406.
You will be given -
(i)a sale price in writing based upon 'todays' activity in the market;
(ii)a report showing comparible sales within 1/2km of your
property;
(iii) a report showing all property presently on the market
in your property postcode;
(iv)a price comparison report, indicating the difference between
listing price & sale price AND the period of time taken
to sell those properties.
At the end of the day, you as owner decide the listing price - our services
are "no win - no fee", until sold. However, our proud record is that
94% of our listed property sells within less than 5% of
our written appraisal and within 60 days.
If you have already done this excerise you'll be surprised how much we would be in agreement as to the eventual probable 'bottom line'.
"We list to sell, we do not list to impress" (ALL NORTHSIDE SUBURBS)
Click here to ask for a confidential market appraisal (Please include - Your name, daytime phone number, the property address and suburb, your email address)
| © Peter Campbell Realty - Albany Creek Office: | |
| Phone 07 3264 2311 Email: sales@petercampbellrealty.com | |
| Caboolture Office: | |
| Phone 07 5495 7811 Email: salescaboolture@petercampbellrealty.com |