How do agents work out what my house is worth?

The evidence base

The starting point is settled sales, not asking prices. An asking price tells you what someone hoped for. A sale tells you what a buyer paid.

Rule 10.2 of the Client Care Rules requires an appraisal to be in writing, to realistically reflect current market conditions, and to be supported by comparable information on sales of similar land in similar locations. So the sales are not optional background. They are the working.

What counts as comparable is judgement, and it is the judgement worth testing. Similar size and land, similar street or a street that trades the same way, similar age and condition, sold recently enough that the market has not moved underneath it.

The adjustments

No two houses are the same, so each comparable sale gets adjusted toward yours.

• Land and floor area. More or less of either, and whether the extra space is usable.
• Condition and work done. Kitchens, bathrooms, roof, joinery, weathertightness, and whether work was consented.
• Aspect and outlook. Sun, privacy, noise, views, the slope of the section.
• Title and zoning. Freehold, cross lease, unit title, and what the zoning allows on the site.
• Position. Where in the street, and which side of a boundary that buyers treat as meaningful, such as a school zone.

Where the evidence runs thin

Some properties have no close comparisons. An unusual house, a large site in a street of small ones, a title that few buyers understand. Rule 10.3 requires the licensee to explain in writing where there is no directly comparable or semi comparable sales data, rather than dress up a guess.

In that situation the estimate widens into a range, and the campaign itself does more of the work of finding the price.

What to check in the appraisal you are given

Ask to see every sale the estimate rests on, with dates. Ask which ones are pulling the number up and which are pulling it down. Ask what would have to be true for the top of the range to be reached.

A written appraisal you can follow from the sales through to the estimate is doing its job. A number with nothing behind it is an opinion.