Whether you’re a home buyer or an investor, if you’re contemplating buying a property, understanding its true value is crucial.
For example, if you agree to pay $450,000 for a property, but your lender’s valuation comes in at $400,000, they will only finance you based on that amount. And if you haven’t got the cash to cover that shortfall, this could cause you serious problems.
Organising a proper valuation of a property you are serious about buying is a must.
Several valuation products and services are available to buyers, from instant online varieties to thorough on-site inspections.
Typically, an online valuation is a very useful guide for buyers but should really only be used as a starting point. A more thorough valuation is the best indicator of a property’s true worth.
In addition to providing you with a more accurate price guide, a full valuation can also deliver an assessment of the local area, market trends and the local market conditions’ likely impact on the property’s value at future sale.
It’s a worthwhile investment.
Do keep in mind that a valuation doesn’t prevent you from spending more than you expected on a property, but it will give you an idea about the implications of doing so.
Moreover, with the real estate market so volatile, just because a valuation might indicate a certain price range for a property pre-auction, a valuer may be willing to reassess this subsequently.
Say, for example, that a valuation suggests your target property is worth $520,000 but you agree to pay $550,000 at auction. If there are several other bids over and above $520,000, this demonstrates strength in the market and may see the valuer suggest a new valuation.
Generally speaking, it will be up to the lender’s valuer to assess the situation, taking into account a broader view of the market.
Whether you are willing to commit to a price over and above your own valuation will depend on your financial circumstances. If you know you simply don’t have the cash, it is certainly a wise idea to avoid bidding any higher than the valuation you receive