An estate agent estimates a property’s likely selling price by combining comparable sales with an inspection of the home and an assessment of current buyer conditions. The process is not a simple price per square metre calculation. The agent weighs land, accommodation, condition, location, competing listings and the likely buyer group, then explains a reasonable range or figure. It remains an estimate, not a guaranteed result or formal valuation.
The estimate starts with the property, not an algorithm
Automated reports are useful for finding sales and broad patterns, but the agent’s job is to interpret the evidence in relation to the particular home. A database may know the number of bedrooms and recorded land size. It may not understand that one bedroom is unusually small, the rear garden faces a preferred direction, the renovation is incomplete or the floor plan works exceptionally well for a family.
The inspection establishes what is actually being assessed. The agent records the property type, land and building attributes, condition, improvements, functional layout, parking, outdoor space and immediate setting. The aim is not to assign a price to every feature separately. It is to understand how the total offering is likely to compete for buyer attention.
Selecting comparable sales
Comparable sales provide the main market evidence for many residential appraisals. The most useful sale is not necessarily the nearest or most recent. It should resemble the subject property in the ways buyers consider important. The agent looks for similarities in location, land, accommodation, style, condition and buyer appeal, then considers the differences rather than pretending the properties are identical.
Victorian requirements place particular importance on comparable sales when an agent prepares the estimated selling price for a residential sales authority. The agent must take account of the three properties considered most comparable. Current guidance looks beyond distance and recency to matters such as age, condition, renovation status, building status, school zoning, neighbourhood features and substantially similar properties in the same estate or complex. The agent should show the owner the evidence used and explain why it was selected.
- Similar property type and underlying land characteristics
- Comparable accommodation, parking and outdoor space
- A location buyers would see as a realistic alternative
- Condition and presentation close enough to allow a sensible comparison
- A sale recent enough to reflect relevant market conditions
Making reasoned adjustments
No two homes are perfectly alike, so the agent makes reasoned adjustments. If a comparable has a larger block, a complete renovation or a superior position, its sale price cannot simply be transferred to the subject property. Equally, a lower sale may deserve less weight if it had a compromised layout, urgent selling circumstances or materially weaker presentation.
These adjustments are usually matters of professional judgement rather than a fixed price list. Owners should be cautious if every difference is given an impressive but unexplained dollar amount. A sound explanation identifies the direction and likely significance of the difference, uses more than one sale where possible and acknowledges where the evidence is limited.
Reading the current competition
Completed sales describe decisions buyers have already made. Active listings show the alternatives available now. If several similar homes are launching together, buyers may have more negotiating power. If suitable stock is scarce, a well positioned property may attract greater attention. The agent should examine advertised competition without assuming that an asking price proves market value.
The stage of competing campaigns also matters. A property that has remained unsold, changed its asking price or returned to market tells a different story from a new listing. Buyer enquiry and inspection behaviour can add context, but that information should support the sales evidence rather than replace it.
Identifying the likely buyer group
Value is expressed through buyers making choices. The agent considers who is most likely to compete for the home and what those buyers compare. A family may place a premium on bedroom separation, a usable garden and school access. Downsizers may focus on single level living, security and low maintenance. Apartment buyers may compare owners corporation costs, building quality, parking and walkability.
This does not justify an estimate based on enthusiasm alone. It helps the agent choose the right comparables and understand why a feature may matter more in one segment than another. A strong appraisal connects physical attributes to demonstrated buyer behaviour.
Separating value evidence from sale strategy
Auction, private sale and off market approaches can create different campaign dynamics, but the selected method should not be used to inflate the appraisal. The agent should first explain the likely market position, then show how a campaign could expose the property to suitable buyers and create a fair opportunity for competition.
Presentation and marketing can improve how buyers understand a home, yet they do not make every price achievable. Owners should ask for a base view supported by evidence, the factors that could move buyer response and a plan for reviewing the estimate if new information emerges.
How to test the quality of an estimate
Ask the agent to identify the closest comparable sales, the most important differences and any sale that appears to contradict the estimate. Ask what current listings compete with the property and what evidence would cause the opinion to change. A confident agent should be able to discuss the limits of the evidence without becoming vague or defensive.
Do not select an agent solely because their estimate is highest. A useful appraisal is transparent enough for the owner to follow. The figure should support a decision, not substitute for one. Where a formal, independent and purpose specific assessment is needed, commission a qualified valuer rather than asking an agent’s market appraisal to do a different job.
Questions sellers ask
Do agents calculate value by price per square metre?
Not reliably on its own. Land or building rates can be a cross-check, but buyers also respond to layout, condition, orientation, parking, privacy, street position and renovation quality. The agent should explain how those differences affect the weight given to each sale.
Why can two agents give different price estimates?
They may select different comparables, assess the property's condition differently or hold different views about the current buyer pool. Compare the reasoning rather than choosing the highest figure. Ask each agent what evidence would cause their opinion to move.
Must a Victorian agent use three comparable sales?
When setting the estimated selling price for a residential sales authority, the agent must normally take account of the three sales they consider most comparable. If the agent reasonably believes fewer than three qualifying comparable sales exist, the estimate must still be reasonable and the limited evidence should be explained.
Can an agent guarantee the final sale price?
No. An estimate describes a reasonable market position based on information available at the time; it cannot guarantee who will compete or what they will offer. Treat certainty without evidence cautiously, especially if the figure is not supported by relevant sales.
Talk to Jason about your property
Ask Jason to inspect the home and explain the comparable evidence, current competition and assumptions behind his estimate.
Request an appraisal