Jennifer Duke at Property Observer has a great article at Property Observer with 5 must-know valuation facts.
Valuations are at the heart of property investment – particularly when it comes to getting finance, or being refinanced, with a lender.
You might also just be asking ‘What is my home worth?’ and a valuation may appear to be the natural way to answer this question.
There are also many reasons why you’d want to get an independent valuation – observer Cameron McEvoy aptly describes five crucial reasons you’d consider this – and so it pays to be aware of what is involved.
Briefly, here are five ‘must know’ elements of valuations:
1. It’s not an appraisal
You may have had an appraisal with a real estate agent, and now believe that your home can fetch in excess of $630,000 on the current market. This may be the case, however a real estate agent’s appraisal is not a valuation, and will not be accepted by the bank as such.
2. They’re not an exact science
It will be of no surprise to any savvy investor that figuring out the price of a property is never an exact science, even for those trained in the valuation field. Similarly, obtaining two different valuations also isn’t an unheard of occurrence, and is the reason many investors will head to a different bank to obtain financing, particularly after a renovation.
3. There are multiple types of valuation
While we’re focusing on a fairly rigorous in-person valuation, there are a number of different types of valuations. From the DIY desktop valuation (which have varying results of accuracy), to the ‘kerbside’ drive by valuation, be aware that not all are created equal.
4. Comparables are heavily relied upon
One of the major aspects that valuers look at to come up with a final figure is that of ‘comparables’. That is, recent sales in your area that are close to your property in location and type. A valuer will be required to judge whether your property is superior or inferior to these sales, and so adjust their valuation accordingly.
Also remember, valuations are subjective.
5. You can assist your valuer
As with any property, present it with its best foot forward for the best change of securing a good valuation. While valuers do not want to be harassed, told how to do their jobs or provided information that could sway them against the numbers, you can be helpful and provide information about improvements undertaken since purchase.
To read the article in full, click here to visit the Property Observer article.