Q: We are looking at buying, but find it really hard to get a price indication on auction or ‘by neg’ properties. How accurate is it to use the CV of an online estimate of the sale price?
Julie and Bruce
A: Didn’t your mother ever tell you “Don’t believe everything you read online”! There are some real problems with online valuations. No-one has actually looked at the property. Basically, the estimate is the result of a computer algorithm and doesn’t take into account interior condition, renovations, aspect, charm or just the general feel of the home. The Auckland property market moves rapidly, and online estimates are based on historic data of settled sales – sales that settled in the past month may have actually sold at auction several months earlier so the sale price is way out of date.
Remember too that there is more than one price for a home: It will be a different value for a buyer who wants to make it their home versus an investor. It may be worth more to you if it’s close to family, or in a school zone that you particularly want. These are the kind of factors that can lead to one buyer paying much more than another.
We have written before that we bought our apartment for just under $1m. Would we care if we had paid just over a million? Not at all. It just doesn’t matter in the scheme of things as long as you get the home you want and you are going to live in for the medium to long-term.
We see online valuations that are both too low and too high. Don’t let an online valuation pressure you into paying more than you think it’s worth to you. It is your opinion of value that counts, not computers!
When you find a home that you really think will work for you, our very strong recommendation is to do your own in-depth research on sales in the area. Take the time to visit other open homes nearby and ask the agents what they think. By all means look up the values online, after all, the more information you have the better, but don’t let a computer-generated valuation stop you from trusting your instinct and getting the home of your dreams.