When it comes to buying or selling a house, it’s essential to understand the value of the property on the current market. Despite what might initially seem like a straightforward process, there are actually many different factors to consider when assessing property value estimates.
This is why it’s important for both buyers and sellers to obtain an accurate valuation from a qualified professional before moving forward with any purchase or sale. After all, lenders won’t hand over the funds until they are confident in the value of the property in question.
So, in this article, we’ll delve deeper into why obtaining a property valuation is so important as well take a look at how values are assessed to ensure that you don’t end up paying too much for your new home – or missing out on money when selling.
What are Property Valuation Reports?
A property valuation is the process of assessing the value of a real estate asset, such as a house, apartment, land or other piece of property. It involves analysing current market trends and evaluating various factors that contribute to the value of a property, including location, condition and potential upgrades.
A professional valuer will also take into account factors such as local infrastructure, transport links and any existing or proposed development plans nearby.
The purpose of producing property valuation reports is to ensure that the purchase price you are paying for a home reflects its true market value. It gives buyers and their lenders an accurate assessment of the estimated property value before any money exchanges hands.
How Does the Property Valuation Process Work?
An experienced, qualified valuer who has the expertise and qualifications to provide an accurate valuation of a property’s worth is usually the best person to conduct a property valuation. You can look out for an Australian credit licence that values can obtain through the Australian Property Institute to distinguish them as Certified Practising Valuers.
In terms of the actual valuation process, the Certified Practising Valuer will start by inspecting the property inside and out, and around the premises. They’ll take detailed notes on all aspects of the home, such as its condition, construction materials used, square footage, architecture style and amenities available.
They also generally consider external factors when putting together their assessment. These can include things like zoning restrictions that could impact future development plans for the area or infrastructure improvements that could increase accessibility and convenience for potential buyers down the line.
Ultimately this helps to create a more accurate estimate of how much a buyer should reasonably pay for a given property in today’s market conditions.
In addition to the property details and external factors, the valuer will look at comparable properties in the neighbourhood to get an idea of the current market value of similar homes. They may also research factors like population growth or economic conditions in the area that could affect future marketability or desirability.
They then take all this information into account when coming up with a final assessment for the property.
Once completed, the valuer typically provides their client with a full written property report outlining each factor taken into consideration during their evaluation along with their conclusions on how much particular features contribute to overall value. This report serves as proof of estimated value and can be used for sale purposes or loan applications as needed.
What is the Difference Between the Market Value from a Valuation and an Appraisal?
A property valuation conducted by a Certified Practising Valuer and an appraisal conducted by a real estate agent are both important tools for assessing the value of a property before buying or selling. There are, however, some distinct differences between the two that should be taken into account when making decisions about the value of a specific property.
As we mentioned above, valuers analyse macro-level factors such as local housing market data and economic indicators, whereas real estate agents typically concentrate on micro-level factors such as comparable sales and sale history within their area. As a result, they may not always provide an accurate representation of what is actually achievable on the open market in terms of price or return on investment when considering all elements involved.
Another key difference between property valuations and real estate appraisals is that reports that registered valuers prepare are legally binding documents which certify an item’s true market value for lending or taxation purposes.
Agent appraisals are more loosely based on an expert’s opinion rather than hard evidence collected from research into actual sales data which inform realistic market values at any given time.
What are the Different Types of Valuations in the Property Market?
There are different types of property valuations depending on the purpose for the valuation:
- Market assessment valuations: gauges the fair market value of the property for buyers and sellers as well as lenders who are looking at a loan application with a higher Loan to Value Ratio.
- Kerbside valuations: this type of valuation takes into account all aspects of the external appearance of the house such as general condition, kerb appeal, landscaping and presentation – but doesn’t take into account any internal features or improvements made since purchase such as new kitchen fit-outs or bathroom renovations. Lenders will use this when the loan is see as low to medium risk.
- Stamp duty valuations: primarily about assessing how much money – in stamp duty fees – someone could expect to pay if they were to purchase a particular property at its current market value.
You can also get a valuation to estimate the amount of capital gains tax you may need to pay when you sell your property; and a retrospective value if you want to determine the value of a property at a certain time in the past. This helps establish the cost base of the property for capital gains tax purposes.
Property valuations can provide homeowners, potential buyers and real estate professionals with invaluable insight into the true value of a given property. When carried out by a trained and certified professional, they can ensure that an accurate picture is painted of the home’s market value.
So, it’s critical for anyone considering buying or selling a home to understand the importance of obtaining an honest and reliable valuation report from a reputable professional to ensure accurate results and avoid any unfortunate surprises down the line.
In addition to getting a property valuer on your team, you should consider also hiring a mortgage broker to help you navigate the home loan process. A mortgage broker can provide access to a variety of lenders and loan products, enabling you to make an informed decision on the best option for your circumstance.
Mortgage brokers also have extensive knowledge of the current market and can advise clients on the most competitive rates available.