One of the biggest challenges that prospective home buyers face is forming an accurate view about the value of a property that they would like to purchase.
Demand in the Melbourne market has been increasing over the last month and a half and this will affect prices.
Demand at an auction, and to an extent at private sale, is driven by a range of factors, all of which you should have an understanding of.
The first factor is the quality of the property. It is generally understood that the higher the quality of the property the more it will sell for. REIV research has shown that location, proximity to facilities and amenities and the condition of the property are, in that order the main drivers of demand.
The second factor is often the most difficult to gauge, competing home hunters. As the majority of homes are sold in an open market the price is determined by competing buyers. The party that is prepared to pay the most will invariably be successful.
The third main factor is other homes for sale in the same area. Due to the importance of location buyers tend to be active in a limited area so the price of one home is set relative to the value of nearby properties. This means that unless there is an unusually keen buyer two nearby properties with similar features will sell for a similar price. The better you understand the local market the more accurate will be your judgement about what the home may sell for.
To improve your understanding of the local market you need to follow what is sold in the local area by watching the media, visiting open houses and attending auctions. You can also purchase reports, similar to ones that real estate agents use, on local sale prices from websites such as www.latestsales.com.au. Taking these steps will provide you with the knowledge and tools to increase your chances of success.
