What is a valuation? And do you need one?
IT may seem like yet another expense, but a property valuation could also be a necessity for your successful real estate purchase.
Benefiting the buyer and seller, a property valuation can help you to assess the current value of a property in an open and competitive real estate market.
What is a property valuation?
A property valuation is generally conducted on a request by you, or a lending institution (such as a bank) who is is looking to fund the purchase of a property.
Normally produced as a report, a property valuation includes property information – rates, size of the land and building, physical details on the construction and condition of the dwelling, details on any immediate issues that may need addressing – as well as information on comparative sales in the area.
When would I need to get a property valuation?
The most common time you will hear people discussing house valuations are when lending institutions are financing a certain property – it is an essential part of the home loan application process.
If you are obtaining a mortgage or refinancing, a bank requires a valuation to ensure the security value of a property covers the loan. If anything happens and the mortgage is unpaid, the bank needs to be confident that it can recover any outstanding amount owing on the property if it had to re-sell it.
The lending institutions usually use their own nominated panel or preferred licensed property valuers. The other times when you may need or want a valuation is if you are selling a house, or before you make an offer.
How do valuers come up with a figure?
For a valuer to do their job, they generally need to visit the property, measure it and note details on the building structure and its condition, any structural faults, rooms and layout and their presentation and fitouts, fixtures and fittings, and any improvements.
They also make notes on the property’s vehicle access and any garages, carports or out buildings.
Often the valuation will include photos of the property highlighting certain features.
Once they have visited the property, they also look at planning restrictions and council zoning and its relative location. The valuer then compares all these attributes to recent comparable sales in the surrounding area before coming up with the magic figure.
How can I increase my house value?
If you are looking to sell your house in the future and want to know what might help when the property is valued, think about this.
You can’t change your property’s location but you can change the house itself. Think about a renovation or extending the floor area of the house. Can you add a bathroom, bedroom or entertaining area? What about improving your indoor-outdoor flow?
Make sure the property is well presented.