Sorrento property owners should evaluate its market price and replacement cost periodically because knowing the current market rates and trends will help them in different circumstances – like, selling their home or insuring or remortgaging it. Let’s discuss each case in detail:
VALUATION FOR SALE OF PROPERTY
Every Sorrento property owner who’s out to sell his home desires the best possible price. This is but natural – sellers expect high rates while buyers dream of bargain prices. The deal is actually struck somewhere in between or close to the edges depending how ready or desperate the buyer or seller is.
If you are out to sell your home, then you should first arrive at its true market value. Here’s how you do that:
1. Start by figuring out where the market’s at. You need to know whether buyers outnumber sellers or whether things are in reverse. You will be surprised to learn that despite the slowdown and the oversupply of homes in Perth, there are suburbs where listed properties have almost dried up. You also must figure out the average number of days it will take before your house is sold.
For example, it takes about 74 and 88 days for a Sorrento house and unit to sell, respectively. The median sale price is $1 million for houses and $440k for units. House prices have appreciated by 5% year on year, while unit prices have jumped 12% for the same period. This data tells us that the number of properties in Sorrento is limited and that the market values will either hold or move up slowly depending on the demand.
You also should check auction clearances. The recent clearances in Western Australia were just 30% implying low sales and many passed-in properties. This percentage strictly does not imply that the demand for Sorrento homes is on the decline – Western Australia contains many areas and therefore interpreting the aggregate percentage could send the wrong signals to sellers based in Sorrento.
Your best source of information is your real estate agent. And hey, I’m assuming you are working with a professional with many years of experience.
If you are still left unsure, hire a licensed valuer. He will charge you money, but you will get an unbiased opinion.
These moves will help you arrive at the true current market value of your house or unit. Remember that knowledge is power, once you understand the market, no fancy sales talk or rumor on earth will make you budge from your asking price.
2. Research the sold section on Sorrento-focused real estate sites. That will give you an idea of the current prices.
3. Analyze the current interest rates. RBA’s (Australia’s Central Bank) current official cash rate is pegged at 2%. Mortgage loans are typically available at 2%-2.5% higher than RBA’s cash rate. Therefore, current home finance rates can vary between 4%-5.5% depending on borrower’s credit score and the financing institution.
Low rates induce people to borrow and invest in homes. Right now, the rates are low and therefore this seems like a good time to buy considering the fact that the market is sluggish.
Researching these factors will help you arrive at the fair market valuation. Next, you should set the lowest price you are willing to go down to and make a steely resolve not to go below that number.
VALUATION FOR REMORTGAGE
Remortgaging involves paying off your existing mortgage by obtaining a mortgage from another lender. It makes sense in the following circumstances:
1. When interest rates have dropped dramatically over a period of time. For example, let’s assume you had obtained a mortgage in 2011 @ 7.5%. The rate these days is about 4%. If you remortgage now, you can save 3.5% which could save you 1000s of dollars in real terms.
It could turn out to be a bonanza if you get a low introductory rate for the first few years.
2. Remortgaging also makes sense if your home’s market price has appreciated considerably. You can borrow extra and use the excess funds to fulfill other pressing needs too. Follow the guide contained in the last section to know how to determine the fair and current market value of your home.
3. You also can consider a remortgage when you figure that interest rates will shoot up or when your current mortgage is about to end or when your lender refuses to accept an overpayment.
Before you decide to remortgage, know that there are costs involved. Mortgage closing costs can include prepaid charges (like loan originating fee), insurance, sales tax, stamps, other fees (underwriting, legal, courier, credit fee, and more), early closure fees, etc. Work these all out and ensure that you are getting into a winning situation before opting for a remortgage.
HOME VALUATION FOR INSURANCE
Home insurance at replacement cost valuation is extremely important. You must value your home at replacement cost and then insure it because underinsurance can place your finances at risk if something unforeseen does happen. Consider the following factors:
1. Home building costs do not remain static or fall – they keep rising.
2. Homes surrounded by a lot of fencing, or homes that are built on slopes are more expensive to rebuild.
3. Replacement costs can also significantly vary depending on the contents and the quality of furnishings in your home.
4. Every time you add to your home, you must re-evaluate its insurance.
You don’t need to arrive at the home’s selling price – all you need to do is determine its replacement value. If anything happens, the sum you receive from the insurance company will help you restore or rebuild your home back to its original state.
Talk to us if you would like an appraisal on your Sorrento home for sale, mortgage or insurance purposes. Not only can we help you arrive at the fair selling price and fill you in with market data, we also can put you in touch with experienced and professional valuers, and recommend insurance companies.