28 Oct A Quick Guide to Property Valuations
Information is power. Knowing how much a property is worth can help you secure a great price during negotiations.
Whether you’re a buyer or a seller, having an accurate property valuation conducted can give you the confidence you need to close the deal in your favour.
And it doesn’t matter if you’ve had one conducted recently. The housing market is constantly shifting.
A house worth $600,000 a year ago could be worth much more – or even less – today.
So it’s vital to always obtain reliable, up-to-date advice on the value of a home when buying or selling.
Who conducts property valuations?
Property sellers can approach either real estate agents or private valuers for a valuation.
While private valuers are not used by banks when lending decisions are made, they are useful for a guide to the estimated market value.
What is a bank valuation?
Bank valuations are altogether another thing. They’re conducted by a lender to determine their own lending risks when you apply for a home loan. And they’ll usually be more conservative than the market valuation.
A bank valuation is purely a numbers game. The valuation will be completed by a Valuer with no emotional attachment to the property. They will assess the property and compare it like for like with other sales in the area.
Often a bank valuation will come in lower than market value which can cause some distress for owners wanting to sell, refinance, or access equity in their property.
If this is the case, give us a call to discuss your situation and scenario.
What exactly is meant by “market value”?
The market value of a property reflects the price that a willing buyer and willing seller negotiate before a transaction takes place.
It is not the current listing price of the property or the amount of money that was last offered for the property.
Unfortunately emotion can play a large factor in determining market value. Owners who have completed renovations and poured their heart, soul and energy into a home will often attempt to set a price that is reflective of their emotional attachment to the home. Likewise, potential buyers can have an emotional reaction to a home on entering that causes them to offer over and above the sellers asking price simply to eliminate competition.
How is property valued?
A property valuer takes a number of different things into account before coming up with a figure.
Typically, they look at the number and type of rooms, the size of the property, location, and areas for improvement.
They may also look into whether the building has a sound structure, the quality of the property’s interior design and fittings, ease of access, and planning restrictions.
Outside the property, they will look into any local council issues and compare recent sales figures in the area to understand how in-demand the property may be.
Valuers can also take into account the local amenity. What facilities are available to the home – train stations, school’s, shopping centre’s etc. All of these factors can influence the value of your home.
What is a kerbside? What is a walk through? What is a desktop?
All of these are terms for a Valuation.
A ‘Kerbside’ is where the Valuer will drive to the property and appraise it on face value from the outside. These are generally cheap and not very detailed. They are often used to confirm the property is in reasonable condition and actually exists (hasn’t been demolished). The usual comparison will still occur.
A ‘Walk-through’ is as described above. Where the Valuer walks through the property taking into account the internal condition of the property and yard.
A ‘Desktop’ refers to a method of valuing a property with readily available information from a multiple of sources. These sources could include RP Data, Land Titles, Real Estate websites. These are generally completed where a property is in a fairly stable neighbourhood with plenty of comparable data to review. These are also a very cheap form of Valuation and will often be performed by your Lender to get pure numbers for your property.
Factors that influence value
Many of the factors that decrease a property’s value are beyond the control of homeowners.
The popularity of a property’s location and surrounds will have a huge impact on its price. For example, a new whizz bang unit block may go up next door making yours look outdated, or a new high rise could block your ocean view.
Government legislation – such as changes to foreign ownership or Labor’s proposed changes to negative gearing and capital gains tax – can also impact the market.
There are, however, ways that sellers can increase the value of their home outside fluctuations in the market. We’ll take a look at a few below.
Kitchen and bathroom: These areas attract the most interest from potential home buyers. Consider allocating a chunk of your budget towards new sinks, counter tops and cabinets. Try changing the doorknobs and cabinet handles or using tile paint for an inexpensive refresh.
Fresh paint job: Painting can make a property feel new. Neutral creams and whites suit most people’s preferences. Lighter shades also give the impression of spacious rooms. Remember to take the paint swatch into your home to see how the shade will show up in the light in your home.
Get trimming: If your property looks gloomy, try trimming overgrown bushes, mowing the yard, and growing flowers. Inexpensive colour pots from Bunnings can be good for a quick pretty-up.
Improve energy efficiency: Buyers may dig deeper into their pockets for a home that helps them save on energy costs. Install appliances with positive energy conservation ratings. Also, replace old windows with ones that have a durable sealing.
And a quick warning to the buyers out there. Don’t be “wowed” by cosmetic upgrades. Remember that there are other important factors you’ll want to consider when you evaluate a property too.
Before your property valuation….
Prior to the Valuer coming to your property, you should have completed any of the cosmetic work noted above.
Take the time to put kids toys and tidy rooms. Clear your desk, dining table and bench spaces of any clutter. This helps to create the perception of space and storage.
Take the time to point out any special features of the property. You may have solar hot water, an unassuming man-shed out the back or the opportunity to build in underneath if the property is at legal height.
Perhaps your property sits within a specific zone that is earmarked for future development. Let your Valuer know. Your local knowledge can be invaluable.
Once you have welcomed the Valuer into your property and shared the special features, leave them alone. They will work quickly and thoroughly to complete the process and will ask you if they require further information.
Want to conduct a property valuation?
If you’d like help finding out how much a property is worth, then give us a call.
We’re more than happy to put you in touch with a reliable, independent valuer who will help give you an insight into the market value of the property you’re looking to buy or sell.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.