What Is The Value Of Your Potential Future Property?
In practical terms, a property is worth what someone will pay for it. But sometimes you need a ballpark figure before the negotiations get underway.
A property valuation is an in depth report of a property’s market value, which is defined by the International Valuation Standards Council as the estimated sale price “between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.
As the careful wording of that definition implies, the final sale price is usually different from the valuation contained in the report, as it’s near impossible to predict how people’s emotions, market knowledge and other motivations might affect negotiations.
A formal valuation can only be conducted by a qualified valuer who has undertaken prescribed education and training in this field to ensure that they take into account all features and issues relating to a particular property. Valuing is a complex task and will take some time to complete.
When would I need a property valuation?
A property valuation offers benefits to both buyers and sellers by providing them with a clear indication and analysis of a property’s market value, its strengths and its weaknesses. It also reduces a buyer’s risk of paying over the odds for a property.
That said, the most common reason why people need a property valuation is that their mortgage lender (usually a bank) requests one. The bank needs to be confident that it can recover any outstanding amount owed on the property, should the buyer default on their mortgage.
How is a property valuation calculated?
A direct comparison with recent comparable sales forms the backbone of most residential property valuations, though valuers will also take into account attributes like the size of the property, number of rooms and fixtures, the condition of the structure, the restrictions on the property and the overall location - and these are only a few considerations.
First, valuers use a handful of recent comparable sales to give them a ballpark figure for the property in question, and then they make adjustments to that figure based on any significant differences found between the above attributes of the properties.
Valuers will also visit the property in question 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 will then provide the customer with a standard three-page report of their findings within two or three days of their visit.
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 also charge slightly different rates for their services. That said, the majority of valuations will cost somewhere between $300 and $600, and most valuers will provide the customer with a standard three-page report of their findings within two or three days of their visit.
What is the difference between a property appraisal and a property valuation?
Unlike valuations conducted by a qualified valuer, appraisals by real estate agents have no legal standing and should only be considered as a guide to pricing. Agents will often offer an informal appraisal of your property when trying to win your business. They base their valuation on recent sales in the area, 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, their valuations are more comprehensive than a real estate agent’s appraisal.
If you are thinking of buying a property but not yet ready to commission a property valuation, you can get suburb reports containing the sold prices of properties similar to yours, plus local median property prices and a snapshot of the area’s property supply and demand, to help you better understand the estimated value of your property.
Would you like more information on the true value of a property? Send me a message HERE, and I can send through some information to assist you.
The above information has been sourced from Realestate.com.au. To read the full article CLICK HERE.