Buying? Get a valuation
If you’re spending hundreds of thousands of dollars on a property, it pays to get a market valuation. That’s the advice of Paul van Velthooven, managing director of Morgans Property Advisors. A valuation can save you time, money and property headaches down the track.
Mr Van Velthooven says that when people buy a car they often have it inspected – to ensure that all is well with the vehicle. But paradoxically, they sometimes balk at paying a few hundred dollars for a valuation of the home they are about to buy.
‘‘When you are investing hundreds of thousands of dollars, it makes sense to ensure you are paying the right price,’’ Mr Van Velthooven says.
Many banks won’t raise a mortgage without a market valuation. This means that if you’re really keen on a property, a market valuation is often a must.
‘‘When the real estate market goes up, banks are happy to lend. But when the market goes down, the banks want a registered valuation to ensure their investment is safe – like any prudent lender would.’’
A valuation is a professional assessment of how much your property is worth. A valuer will inspect the property, consider all the factors that affect its value, and write up a professional property report and valuation.
There can be a significant difference between the registered valuation (RV) that is on your rates invoice and a valuation from a registered property valuer.
‘‘The RV is a computer-assisted value, which is used for rating purposes. It’s function is to apportion rates among properties. It really is a tool for councils.’’
In the real estate market, one could argue that, because of the mobility of the market, an RV is out of date as soon as it is produced. In other words, a rating value is no more than a measure of a property’s value at the date of the last revaluation.
Mr van Velthooven says an individual property valuation is more specific and up to date.
‘‘If you have upgraded your house in any way, the upgrade may not be taken into consideration by QV for your RV if there has been no building permit involved.’’
Valuers look at the condition of the property, the location of the property, and recent sales in the area, and deliver an independent valuation.
As professionals, valuers must meet rigorous tests of education, training and competence, and follow a professional code of practice. That’s because there could be legal ramifications if they get it wrong.
This factor also underlines the difference between a valuation by a registered valuer and an appraisal by a real estate agent.
‘‘A real estate agent’s appraisal is not recognised by lending institutions and is not recognised in a court of law,’’ Mr van Velthooven says.
He recommends buyers have a property valued before they make an offer.
Sometimes, people make an offer and then go to the bank with an application for a loan, which is then rejected.
‘‘Make an offer conditional on a valuation. Then, if the valuation doesn’t match [your expectations], you can renegotiate.’’
Property agent Gill Welch advises her vendors to get a valuation or to speak to someone at QV, to make sure their valuation is accurate, before putting their property on the market.
‘‘That way, they know they are getting an up-to-date assessment of their property’s value and can market it accordingly,’’ Mrs Welch says.
‘‘The RV is not an accurate assessment of sale price.
‘‘A real estate agent gives an appraisal, and a valuer gives an indepth, independent and objective assessment.’’
Price estimation time: If you have redecorated your property, you may need a registered valuation to reveal its true value on the market.