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Appraisal Calculator/Ready Reckoner

Property is a valuable asset whether it is the family home or an investment property and to keep abreast of your financial position it is always important to know what your property is worth.

You could of course ask a real estate agent to appraise the market value of your home or employ a valuer to provide an official valuation. However, if it is a quick estimate you want, why not use our Ready Reckoner Calculator below.

Hints and tips on using the Ready Reckoner.

  • Land value. Search the Internet for blocks of land for sale in your suburb or for the sale of original, unimproved homes to estimate the value of your land.

  • Replacement Value.
    • Size of home, multiplied by the estimated cost by a builder of similar quality and reputation as the current home. E.g. a low to mid-range 2 storey home could cost $1500 per square metre to build. The very top end homes can cost as much as $5,000 per square metre to build.
    • Level of finish, whether the home is architect designed or off the plan, project style will affect the build cost dramatically.
    • Other costs that must be added to this figure are “holding costs” (The cost of the finance to fund the project or the opportunity cost of those funds being in a bank earning interest), a well as site works. For some sites these can be $50,000 to $100,000, others much less, so need to be taken into account.

  • Finishing Costs. All those extra costs to complete a home that are not part of the building contract. Depending on the builder, this could be things like; window treatments, flooring, outdoor kitchens, home theatre componentry, pools, landscaping etc.
    NB: In some cases these costs do not add to market value to the full extent of what was paid.

  • Less Depreciation. Homes are said to depreciate by between 2.5% to as much as 4% per annum. (Flat or declining markets buyers always devalue them quicker.) Many homes at 20 years old are seen by some buyers already as “land value” depending on whether they have had upgrading or not. Why homes depreciate is not simply a function of their structural integrity. Styles date, kitchens become tired, bathrooms become worn, things overall look and feel “pre-loved”. Brand new homes, cars, clothes always attract a premium price and as things get older they depreciate.

  • Wow Factor. In the case of homes that exude some special “X” or “WOW” factor, for such things as amazing views (Often this is factored into the land value though), or amazing presentation, or a particular design feature, some allowance can be made for this in the value. It is almost the opposite of what we do for “Depreciation” which discounts a home that has started to show wear from its original brand new state.

  • Calculate and the result with be the Probable Value of the property.
    We are not suggesting this figure is the same as market value, or will be the asking price of a particular property. That varies dramatically based on market conditions, supply and demand, timing required etc.

This figure is a mathematical formula which is not the same as current fair market value. It is a useful guide though on what the property could be worth, under some circumstances. It is un-emotive, which can be helpful. Many buyers use this type of formula to calculate what a property could be worth. Ultimately the only true measure of market value is two things.

1) What a willing buyer is prepared to pay
2) What that informed buyer has the capacity to finance or fund. “In this market, this figure may be less than 1)”.

Land Value $
Plus replacement value of home $
Plus finishing costs $
Minus depreciation %
Plus Wow factor $
Current state of the market $

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