Three Property Price Checks Before You Offer

If you're about to spend hundreds of thousands of dollars on an investment property, relying on a single price reference leaves a lot riding on one source. An asking price, a lender-facing estimate and an online estimate can each provide information, but none tells the whole story on its own.

Our approach starts with one thorough piece of work, a comparative market analysis, and then cross-checks it against two additional price indicators. The analysis is the foundation. The other two checks give us additional reference points before an offer is made. When they differ materially, we want to understand why.

1. What have comparable properties actually sold for?

Our starting point is recent comparable settled sales. That's why our price assessment begins with a comparative market analysis, or CMA. Not simply the asking price or current listings. Actual settled sales.

We look for comparable sales with similarities in land size, bedrooms and other relevant property characteristics. No two properties are identical, so each comparable is considered in context before it is used in the price assessment.

One sale tells you very little. That's why we build each CMA using ten comparable sales and price-index each one to current market conditions. An older comparable reflects the market in which it sold, so price-indexing helps us consider how market conditions may have changed since that transaction. The CMA is the most detailed of the three checks and forms the foundation of our price assessment.

2. What does an independently arranged desktop valuation say?

The second check is a desktop valuation arranged through a mortgage broker, where available, with no one physically attending the property.

Its usefulness is that it comes from a different source and is prepared independently of our CMA. If the desktop valuation sits materially away from our assessment, we want to understand the reason for that difference before an offer is made.

3. What does a second data source say?

The third check comes from a data provider we subscribe to, which produces its own automated estimate.

Like a desktop valuation, it has limitations. It does not physically inspect the property and may not fully account for every feature or condition difference. Its value in our process is as another independently generated price indicator that can be compared with the CMA and the desktop valuation.

What the three checks are really for

The goal isn't to average three numbers or search for a number that makes the property work. The CMA remains the foundation: ten comparable sales, price-indexed and considered in the context of the target property.

The desktop valuation and data-provider estimate are additional reference points. Where they broadly align with the CMA, they may provide further support for the assessment. Where one sits materially away from the others, we investigate the difference before deciding whether to proceed.

The asking price is still only one reference point

The asking price is set by the selling side and serves a different purpose from an independent price assessment. It can provide useful context, but it isn't the starting point for our analysis.

Our job is to understand what price the available evidence supports before deciding what we're prepared to offer. That's why we don't rely on one source alone.

If you want the detail on how the underlying comparable-sales analysis is built, we've written that up separately: How We Assess the Price of Every Property Before We Offer.