When looking at comparable properties on the market what are the rules and what should you look at?
Ryan: All right, Sonny Kim is asking, when you search for comparable sold properties what are the rules? For instance, in Victoria agents put a statement of information but on what basis do they pick comparable properties? Thanks.
When you’re looking at properties and you’re looking at comparable ones, what are the rules with that? Well firstly there are no rules, right? It’s just, you want to look at properties that are as similar to the one that you’re looking at as possible because you want to understand what exactly is your property worth.
Ben: Yeah, so when I’m looking at, like I’m comparing an on market property, I don’t look at anything else that’s on the market that I can compare it against, because that product has yet to sell, so the market hasn’t defined what that product’s worth.
What I do look at is, you know in realestate.com and domain.com.au. There’s amazing sold history data now being fed in by RP Data, which people like me have to pay a fortune for but realestate.com is just feeding a lot of that information through to people for free now, so jump on realestate.com.
What I like to do, again, I’m a bit over the top, is I print out a map of the suburb, I get onto the sold part of realestate.com, I look at all of their three bedroom, one bathroom houses for sale in that suburb on the same size piece of land that have sold in the last, let’s call it 12 months, two years and I map them by price so that I understand the cluster of more expensive and least expensive pockets, the more expensive and cheapest streets.
Then I look at those properties and I find properties that have recently sold in the last three to six months that are directly comparable to what I’m thinking of buying and that is how I ascertain market value or sold history like data in a meaningful way as opposed to just looking through realestate.com, which is generally anywhere between five and thirty percent over what the properties sell for in most suburbs in Melbourne and Sydney in particular.