How do I understand and evaluate a real estate market appraisal in NZ?

How to Read a Market Appraisal From an Agent
A real estate market appraisal is the foundation of your pricing decision. Here is how to evaluate one critically.

What a market appraisal is
A market appraisal (also called a comparative market analysis or CMA) is an agent’s assessment of your property’s likely selling price based on recent comparable sales, current market conditions, and the specific characteristics of your property. It is not a registered valuation (which is conducted by a registered valuer and has legal standing), it is a professional opinion supported by evidence.

The comparable sales evidence
The core of any credible market appraisal is a set of comparable sales: properties similar to yours that have sold recently (ideally within six months) in your suburb or comparable areas. For each comparable sale, the appraisal should show: the address, sale date, sale price, property description (bedrooms, bathrooms, land area, floor area), days on market, and how it relates to your property (superior, inferior, or comparable).

Adjustments for differences
No comparable property is identical to yours. A credible appraisal acknowledges and adjusts for the differences: if a comparable property has a more updated kitchen than yours, the agent should note that your property might achieve a slightly lower price for that reason. If you have a larger section, they should note the premium this may attract. Adjustments make the comparison honest, their absence makes the appraisal superficial.

The market conditions context
A quality appraisal places the comparable sales evidence in the context of current market conditions: is the market improving or declining from where those sales occurred? If comparable sales are from six months ago and the market has improved since, the current value may be above those comparables. If the market has softened, it may be below. The agent should explicitly address this time-adjustment question.

Red flags in an appraisal
Be alert to: comparable sales that are not genuinely comparable (different suburb, significantly different property type, much older sales dates); an appraisal range that is very wide (a $150,000 range from $600,000 to $750,000 is not a useful opinion); no explicit comparables cited, just a price assertion; and an unusually high appraisal not supported by the evidence provided.
​A high appraisal that cannot be evidenced is a listing tactic, not a market assessment.

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Paul Sumich is a Whangarei-based real estate professional with local Northland expertise. Find more at paulsumich.co.nz/blog