Appraise Property (Real Estate Agent Course)

  • Category:
    Management
  • Document type:
    Assignment
  • Level:
    High School
  • Page:
    3
  • Words:
    2192

CPPDSM4003A Appraise Property

Short-answer questions

Question 1

Explain the requirements in your state/territory regarding providing price estimates and substantiating the estimated sale and rental price of property. In your answer, be sure to cover consumer protection requirements as well as any requirements of your state/territory agent legislation, rules/codes of conduct (where applicable) etc.

According to South Australian Law, An agent is required to always insert a date on the valuation report and give a detailed clarification that the price estimate will only be relevant on the specified date that the appraisal was conducted.

Question 2

What criteria should the agent use to substantiate sale or rental price?

< The first criteria an agent uses to substantiate sale or rental price is by providing an evidence for the “reasonableness” for the price estimates of any property. There has to be current market information in the report to substantiate the rental price opinion. Consequently, agents are required to prepare a Competitive Market Analysis (CMA) or any similar report that gives the summary of market activity >

Question 3

Anthony is a local real estate agent for City Property Networks. He has been asked to come back and further discuss the potential opportunity of listing 94 Watkins Rd Watkinsville. Upon arriving at the vendors’ home, Anthony gets straight down to business with the vendors. Anthony has been told the following information from the vendors.

• They prefer Anthony to be the listing agent.

• They do not accept his appraisal of $850,000 for the property.

• They explain to Anthony they need to get their sale price as the bank want to take possession of the property.

• They need 1,100,000 to satisfy their debts.

• They have offered Anthony $15,000 in advertising money to try get a higher sale price.

Anthony desperately wants to get this listing and hence lists the property at $1.1 million, knowing the following.

• No home in the area has ever achieved that high a sale price.

• There are four (4) homes within two (2) minute drive that are currently on the market for less money and larger overall property size.

• The past three (3) recent sales for properties like this were all sold for $839,000.

Anthony says nothing to the vendor about their overestimated price expectations price difference and lists the property for $1.1. Million. What has Anthony effectively done wrong and what impact will this have? What should he have explained to the vendors during this appointment?

<Agent is expected to inform the client adequately about the value of the property and must not mislead the client knowingly or unknowingly by either quoting high or low prices of the property. Anthony is fully aware of the possible sale of the property which is less than what the owner wants, but still goes ahead to list the property. Anthony ought to have told vendor about the market prices and the market prices of similar properties within the same region. In fact, by listing the property at $1.1 million and yet it is likely to go for $839000, Anthony will ‘seriously disadvantage the client’ and can be charged as guilty in the South Australian Law>

Question 4

appraisal). that might apply to presenting information on a sale or rental price to a client (i.e. requirements that the client may state for the client requirements(a) List two (2)

<Some of the requirements by the client include timing for receiving the appraisal and whether there is specific inclusion required. Secondly, there is the format where the agent needs to find out whether the client’s bank has a specific format. >

(b) List two (2) agency requirements that might apply to presenting information on a sale or rental price to a client (i.e. requirements that the agency places on the appraisal).

<Agency requirement include standard wording needed such as the use of disclaimer, reference date and such like. Secondly, there is the requirement for the completion of agency checklists such as client disclosure of the material facts>

Question 5

Once you have completed a sales or rental price appraisal for a property:

(a) How would you obtain feedback on the suitability and sufficiency of your appraisal in order to incorporate suggestions for improvement?

<Feedback can be obtained by seeking comments from clients and staffs, performing quality assurance data, conducting regular meetings with clients, and looking at various documentations that were issued back by the client>

(b) How would you need to maintain these agency records, with due regard for client confidentiality and legislative requirements?

<There is need to have written agreements that covers issues such as security of information and consequences of possible breach. The contancts of clients should not be used to make calls beyond the set hours in the Do nnot Call Register. >

Part B: Case Study 1

You are now required to complete a Comparative Market Analysis (CMA) from the information provided in the description below. Your CMA must be completed professionally for presentation to a client. You will be required to:

• Describe the current market conditions for unit sales in the area.

• Calculate the median unit price in the area (all types of units).

• Describe whether it is a buyer’s or seller’s market (all types of units).

• Calculate the average selling time of units in the area (all types of units).

• Please note that all the properties listed may not be comparable, so be selective about which properties should be used in your report.

• Please put an asterisk against your most direct comparable properties.

• Provide a suggested selling price expressed in a 5% price range.

You may like to use the template provide below to produce your CMA however this is not compulsory, you may use your own format. •

Subject property: Unit 30 ‘Fairview’ 15 Dunmore Terrace, Elsewhere.

Two-bedroom unit in a medium sized high-rise complex that is five years old. The complex is established and has a resident manager. The unit has two bathrooms and has very generous double-sized bedrooms. The unit is owner-occupied and is in excellent condition.

The complex has a lift and overlooks the river, although it is not absolute river frontage. The subject unit is on the 6th floor and has a highly sought North Eastern aspect. This is a desirable feature in units in this area and the aspect will carry a premium price. The unit also has a double car lock up garage (side-by-side). This is also very popular with buyers in your area. The complex has a pool and a half tennis court and intercom security.

Other units currently for sale in ‘Fairview’:

Unit 18: Two-bedroom unit on the 4th floor. It has similar river views and aspect. It has an identical floor plan and a double lock up garage. The major difference between the two units is that this unit has been rented for three years and is not in good condition. It would need to have new carpets and be repainted. The unit could easily be redecorated for about $3,000–$4,000.

List price: $455,000. It has been on the market for two weeks.

Unit 31: Two-bedroom unit on the 6th floor. This unit faces south west and has stunning mountain views. However the aspect is considered by local owner-occupiers to have a less desirable aspect. The unit is slightly smaller than the subject unit and has a two-car tandem lock-up garage. It is in reasonable condition.

List price: $430,000. It has been on the market for four weeks.

Similar strata unit complexes in the area with similar outlook and facilities:

• Unit 17 Montana Court, 25 Dunmore Terrace, Elsewhere

Two-bedroom unit in a well-maintained complex a hundred metres away. The two-bedroom unit is three years old and on the 8th floor. It has similar finishes to the subject unit and is in good condition. It has excellent north easterly river views. The second bedroom is slightly smaller than the second bedroom in the subject unit. It has a two-car tandem lock-up garage.

List price: The property is to be auctioned. It is one week into its auction campaign. Buyers are indicating a price around $475,000–$480,000 at this stage. Your CMA estimate was around $480,000–$485,000.

• Unit 1 Montana Court, 25 Dunmore Terrace, Elsewhere

Two-bedroom unit on the ground floor. It has a very private courtyard, however only limited river views. This unit has the same floor plan as the unit on the 8th floor and is in good condition. It also has a two‑car tandem garage. The courtyard is considered a valuable asset as it has direct pedestrian access and visitors do not have to go through the buildings foyer.

List price: $470,000. On market for one week and has rejected an offer of $460,000.

Sales recorded over the last six weeks:

Other sales in ‘Fairview’, 15 Dunmore Terrace, Elsewhere:•

Unit 38: 2 bed room unit, 7th floor, northern aspect, identical floor plan, good condition, double car garage. Sold for $470,000. Listed at $470,000. Sold in five days.

Unit 11: 2 bed room unit, 3rd floor, western aspect. Slightly smaller floor plan, moderate condition, tandem garage, sold for $434,000. Listed at $440,000. Sold in two weeks.

Unit 40: 3 bed room unit on 10th floor. North eastern aspect. Luxury appointments and in excellent condition, 2 car side-by-side garage. Sold for $580,000. Listed at $585,000. Sold in six days.

Unit 32: 3 bed room unit on 8th floor. North eastern aspect. Good condition. Smaller than unit above. Two‑car side-by-side garage. Sold for $512,000. Listed at $520,000. Sold in 21 days.

Unit 4 ‘Regal Court’ 27 Dunmore Terrace, Elsewhere•

2 bed room unit with northern aspect. Older unit without an ensuite. However very large. Needs kitchen and bathroom refurbished. Single car garage with good storage space. Listed at $420,000. Sold in seven days for $415,000.

Montana Court’ 25 Dunmore Terrace, Elsewhere•

Unit 27: 2 bed room unit with ensuite in modern complex 100 metres from subject unit. 7th floor, good condition. Very good uninterrupted river and city views with northern aspect. Two‑car side-by-side garage. Listed for $480,000, sold in five days for $478,000.

Unit 32: 2 bed room unit in same complex, 9th floor, excellent northern river views. Moderate condition, two‑car side-by-side garage. Listed for $485,000, sold in 21 days for $482,000.

Area Profile

The area Elsewhere is very popular with unit buyers. It is only 5 minutes from the city and 10 minutes from the university. It appeals in particular to young professionals who work in the city and enjoy the lifestyle of the river, restaurants and the facilities available in the botanical gardens and the university that are all close by.

One of the greatest assets of the area is the public transport system. Buses service the area to the city and university every 15 minutes and two railway stations are only a short stroll from the unit complexes. This saves young commuters about $200 per month in parking fees in the CBD.

There are no separate statistics for two and three bedroom units in the area. However over the last six months, unit prices have risen by 15%. As a result of strong buying activity there are very few units available for sale, with only around 5 units a month selling in the area. The average selling price of units is $447,500.

Comparative Market Analysis

Prepared by: Insert your name

CMA date: 05/08/2016

Property: Unit 30 ‘Fairview’ 15 Dunmore Terrace, Elsewhere. Two-bedroom unit, has two bathrooms and has very generous double-sized bedrooms

Client: (Client’s name withheld for privacy)

Market overview:

Elsewhere areas have high demand for unit buyers due to its proximity to the university and the city which only takes 10 and 5 minutes respectively. Common clients are young professionals working within the area and the transport system is one of the greatest asset for the area. Young commuters are capable of saving up to $200 per month from the use of a train which is a short distance from unit complexes. For the last six months unit prices have gone up by 15 percent due to the high rate of buying. The average selling price is $447500

Current competitive listings

Comments

Unit 18 Fairview

floor, double lock up garage, not in a good state, and need redecoration for $300-4000.th4

Unit 31 Fairview

floor, slightly smaller, two car tandem lock up garage, reasonable stateth2 b/room, 6

Unit 17 Montana Court, 25 Dunmore Terrace, Elsewhere

$480000-$485000

floor, smaller second b/room, two car tandem lock-up garageth2 b/room, 8

Unit 1 Montana Court, 25 Dunmore Terrace, Elsewhere

2 b/room, ground floor, private courtyard, limited river views, good condition, two car tandem garage, has rejected offer of 460000

Property sold/rented:

List price:

Selling price/
Rental price

Percentage difference

Time on market

Comments:

‘Fairview’, 15 Dunmore Terrace, Elsewhere

0

floor, identical floor plan, good condition, double car garageth2 b/room, 7

floor, smaller floor, tandem garage, moderate conditionrd2 b/r, 3

‘Regal Court’ 27 Dunmore Terrace, Elsewhere

floor unit, North Eastern aspect, luxury appointments, Very good condition, two car side by side garageth2 b/r, 7

floor, Northern river, moderate condition, smaller, two car side by side garage.th2 b/r unit, 9

Subject property price range suggested is $400000-$49000

End of Assessment

Page 10 of 10CPPDSM4003A_AS_v1.1