What is True Market Value?
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What is the main topic discussed in this episode?
It's The Real Estate Podcast, brought to you by Ray White, the largest real estate and property group in Australasia. And welcome to another episode of The Real Estate Podcast, available on iHeartRadio, also on Google and Apple Podcasts, or wherever you get your podcast from. Well, it must be Friday because coming up, we've got another episode from the podcast series, Let's Talk Property, and we're going to be looking at how to value property accurately.
What is 'true market value' and why does it matter when buying property?
When it comes to buying a property, there is absolutely one golden figure that you must know, and that is true market value. Market value is a measure based on a defined process and it's the key to understanding what you should pay for any property. It's a baseline metric which will affect other major decisions that you make. And while most people feel that they can come up with an ideal market value, being as accurate as possible is not as easy with those that don't have the experience. So to help us understand this better, we're joined by Rich Harvey, buyer's agent and CEO from propertybuyer.com.au. G'day, Rich. Welcome back to the Real Estate Podcast. G'day, Craig. Great to be on the show with you again.
You know, last Friday when we were talking, Shane Warne was still with us.
Oh, look, very tragic week. And also Rod Marsh, not long before that. Exactly. Yeah, one of our icons of Australian cricket has passed away, very, very sadly.
How is market value officially defined in practice and the courts?
Yeah, such a tragedy. And have you got a favourite moment or memory? Yeah, absolutely. I do remember, I think it was very early on in his career against Mike Gatting in the English team. And he bowled this ball well outside leg stump and it just spun unbelievably back to get off stump.
What primary methods do valuers use to assess property market value?
And Mike Gatting just raised his eyebrows and went, how the hell did he do that? It was just a classic moment. It's always etched in my memory, you know. So what about yourself? Have you got a favourite memory?
Yeah, I think my memory of him will always be, and by the way, I was a leg spin bowler myself in club cricket, so I've got a real appreciation for leg spin. But for me, it would be when he would bowl something that really deserved to be smashed over the fence. And he would have this little smirk where the batsmen would just block it. And it was like he was throwing down grenades. Even wide sometimes would just be blocked out because they were completely confused by him.
I think he had people under a spell.
Which comparable sales criteria should you use to find accurate recent matches?
He had a particular way of just playing with their mind. There were a lot of mind games out there. That's why he was so good.
Yeah, he'll certainly be missed. Well, as I mentioned, people feel like they can come up with an idea of market value, but it's a tricky business.
What three property attributes (land, structure, ancillary) most affect valuation?
So what is the definition of market value?
Yeah, this was actually came up through a court case, but the definition of market value is simply the amount an asset will exchange for on a given date in an arm's length transaction between a willing buyer and a willing seller. Essentially, it's a willing buyer and a willing seller and not in a forced situation. So it's not in a desperado, you know, I need to sell because I'm going bankrupt situation or because they're being pressured by family members to sell. A true definition of value is willing buyer, willing seller in a normal market. And it's not like a special price that a neighbor wants to pay to get their neighboring property. And it's not the price of a property in 12 months time. So it's really important to understand that definition and just to remove any kind of emotional outliers from that figure.
Yeah, that's interesting. And what about the process and the main tools that a valuer will use to assess market value accurately?
Well, there's two ways to assess market value. And the most fundamental tool that a valuer uses is comparable sales. And this is where you've got to collect a number of relevant and recent comparable sales properties that have actually transacted in the local area. And they've got to be directly comparable to the subject property. So you've got to think about things like the location, the land, the house size, the house age.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:02–0:30
2
What is 'true market value' and why does it matter when buying property?
0:30–1:35
3
How is market value officially defined in practice and the courts?
1:35–1:51
4
What primary methods do valuers use to assess property market value?
1:51–2:34
5
Which comparable sales criteria should you use to find accurate recent matches?
2:34–2:50
6
What three property attributes (land, structure, ancillary) most affect valuation?
2:50–5:17
7
How can you contest or respond to a bank valuation you disagree with?
5:17–6:12
8
What common mistakes do buyers make when estimating a property's value?
6:12–11:17
Speakers
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