Your Property Is Normally Your Biggest Asset

Understanding Its Position Can Help You Make Better Property Decisions

For most homeowners, their property is normally their biggest asset.

Yet it's surprising how often people have a very clear idea of what their car is worth, what they have in superannuation or how their investments are performing, but only think seriously about their property's value when they're considering selling.

I think it's useful to understand where your property sits in the market before you need to make a major decision.

Not because I'm suggesting you should sell it.

Quite the opposite.

Knowing where you stand can help you make better decisions about whether to renovate, improve, refinance, downsize, buy another property, stay exactly where you are or eventually sell.

1. Your Property's Value Isn't Just About Its Size

Two homes with the same number of bedrooms and bathrooms in the same suburb can achieve very different prices.

Land size matters. Location within the suburb matters. Street appeal, layout, condition, renovations, outdoor areas, parking, views and the overall presentation of the property can all influence how buyers respond.

Then there are factors you can't change.

A home backing onto a busy road is different from one in a quiet cul-de-sac. A property with an outlook may attract different buyers from one surrounded closely by neighbouring homes.

That's why I don't believe a property's likely selling price can be determined properly from basic data alone.

2. Recent Comparable Sales Matter

One of the first things I look at when assessing a property's likely market position is what comparable properties have actually sold for.

The word comparable is important.

A renovated four-bedroom home on a large block isn't necessarily comparable with an original three-bedroom home several streets away simply because they're in the same suburb.

I look at the similarities and the differences.

What did the property offer?

What condition was it in?

How large was the land?

What was the layout like?

Did it have a pool, additional living areas, a renovated kitchen or superior outdoor entertaining?

And importantly, when did it sell?

Markets change, so an old sale may not tell us very much about what buyers are prepared to pay today.

3. Properties for Sale Aren't the Same as Properties Sold

I also look at competing properties currently on the market, but I treat them differently.

An advertised price is what an owner or agent is asking.

A sold price tells us what a buyer was actually prepared to pay.

Current listings are still useful because they show what buyers can choose from if your property were to come onto the market today.

That's important when thinking about competition and positioning.

But I wouldn't base an opinion of your property's likely selling range simply on what another owner hopes to achieve.

4. Condition and Presentation Can Influence Buyer Perception

Buyers don't assess a property using a spreadsheet.

They walk through the front door and react to what they see and how the home feels.

Maintenance, cleanliness, natural light, gardens, clutter, furniture placement and general presentation can all influence that reaction.

Sometimes relatively small improvements can make a noticeable difference.

Other times homeowners spend significant amounts of money on improvements that may make very little difference to the eventual selling price.

This is why I prefer looking at the property before money is spent, particularly if selling may be on the horizon.

5. Not Every Improvement Adds Equal Value

One of the biggest mistakes homeowners can make is assuming that spending $50,000 on their property automatically adds $50,000 to its value.

It doesn't necessarily work that way.

Some improvements can make a property considerably more appealing to buyers.

Others may improve your lifestyle but deliver little financial return when you sell.

And some improvements are so specific to the owner's taste that they can actually narrow the number of buyers who find the property appealing.

That doesn't mean you shouldn't make them.

If you're staying in your home and an improvement will make your life better, that's a perfectly valid reason to do it.

But that's different from making an improvement because you expect it to increase the selling price.

6. Maintenance Matters Too

There's also a difference between improving a property and simply maintaining it.

Replacing something that's broken doesn't necessarily add value. Sometimes it simply prevents the property from losing appeal.

A leaking gutter, damaged fence, deteriorating paintwork or obvious repair issue can make buyers wonder what else hasn't been maintained.

One visible problem can quickly become five imaginary ones in a buyer's mind.

That's why keeping on top of maintenance is important whether you're selling soon or staying for another ten years.

7. Online Estimates Only Tell Part of the Story

Online property estimates can be useful as a starting point.

They're quick, convenient and based on available property and sales data.

But an algorithm hasn't necessarily stood in your kitchen, seen the renovation you completed last year, noticed the condition of the bathrooms or experienced the outlook from your outdoor entertaining area.

It also can't always understand the things buyers will love or dislike about a particular property.

That's why I see automated estimates as information, not a substitute for actually assessing the property.

8. Knowing Your Position Doesn't Mean You Have to Sell

This is probably the most important point.

Asking what your property might be worth doesn't mean you've decided to put it on the market. If selling is one of the options you're considering, you can also read more about selling your home with Jodie Brooks before deciding what you want to do next.

You may discover that selling makes sense.

You may discover that improving the property first makes sense.

Or you may decide you're far better off staying exactly where you are.

All three can be good outcomes.

For me, the purpose of understanding your property's position is to give you better information before you make the decision.

Your Property Is Part of Your Bigger Financial Picture

Property decisions rarely happen in isolation.

Selling one home may mean buying another. Renovating may involve borrowing money. Downsizing may release equity. Staying where you are may be financially preferable to moving.

That's why I think the conversation should be bigger than simply asking:

"What can I sell my home for?"

The better questions are:

Where does my property sit in the current market?

What are my realistic options?

And which option puts me in the best position for what I want to do next?

Your property is normally your biggest asset.

Understanding it properly can help you make much better decisions about what you do with it.