It is often said that a property is worth what ‘someone is willing to pay for it’. But sometimes you need an educated estimate before the negotiations begin.
A property valuation is a detailed report of a property’s market value. If you are thinking of selling your home, you should take steps to find out what your estimated property value is.
The sale price of a home is usually different from the valuation you will obtain in a valuation report. It is near impossible to predict how people’s emotions, market knowledge and other motivations might affect the sale price negotiations.
When would I need a property valuation?
A property valuation offers benefits to both the buyer and seller. In providing a clear indication of a property’s market value, it reduces a buyer’s risk of paying too much for a property. As it gives a detailed analysis of a property’s weaknesses, it can help a seller decide which renovations to make to enhance a property’s value.
That said, the most common reason why people need a property valuation is because their bank or lender requests one.
Property valuations are an integral part of the mortgage process. A bank or lender refers to the valuation to give them the confidence it needs if they have to recover any outstanding amount owed on the property, (should the buyer default on their mortgage).
Property valuations are also often required for financial reporting, for taxation compliance, for family law mediation and for determining the amount of compensation given to land owners for easements or land acquisition.
How is a property valuation calculated?
A direct comparison with recent comparable sales is how most residential property valuations are calculated. This gives the valuer a starting point. A valuer will also take into account the size of the property, the number and type of rooms, and the fixtures and fittings. Adjustments are then made to the figure based on comparable sales and properties.
Valuers will also visit the property that they are valuing, so that they can assess the condition of the building and make a note of any structural faults and nuances that might affect its market value. Most valuers will then provide the customer with a standard two or three page report of their findings within two or three days of their visit.
Nb: Commercial property requires more financial analysis and development sites can require more planning consultancy when a valuation is undertaken.
How much does a property valuation cost, and how long does it take?
The exact cost of a property valuation depends on the size and value of the property, and each valuer will charge different rates for their services. That said, the majority of residential property valuations will cost somewhere between $300 and $600.
What is the difference between a property appraisal and a property valuation?
Unlike valuations conducted by a licensed valuer, appraisals by real estate agents have no legal standing and should only be considered as a guide to the value of your property.
Real estate agents will offer an appraisal of your property when vying for the sale of your home. They base their informal valuation on recent sales in the area and their experience, and will offer the service free of charge.
Licensed valuers, on the other hand, charge a fee for their service. They are legally responsible for the information they provide and so must base their appraisal on facts. Consequently, a licensed valuer’s valuations are more comprehensive than a real estate agent’s appraisal.
Call us today on 8300 8300 or email us on info@bernielewis.com.au to assist you with your valuation and mortgage needs!
