What is a val­u­a­tion? And do you need one?

The Western Star - - REAL ESTATE -

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.

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