If you’re looking to buy or sell an overvalued or undervalued property, you could be heading for trouble. Knowing how property valuations are arrived at is crucial – and doing your research beforehand could save you thousands?
Whether you plan to purchase a new property, refinance your mortgage or access the equity in your home, chances are you’ll need a professional property valuation.
But considering the major impact the valuer’s judgement will have on your borrowing and investment options, it pays to know how the valuation process works.
A property valuation is the valuer’s opinion of what the bank could sell the property for in a relatively short space of time.
To determine what your property is worth, the valuer will weigh up a number of variables. These include the location of your home, the property’s structure and condition, standard of presentation and fit out, access to the property, facilities and amenities nearby and any local council planning restrictions.
But even if you have all this information at hand, there is still no set equation for valuing the property. Valuations can therefore come in under or over the market value, with the discrepancy climbing by as high as 25 per cent.
So, before your valuer is due to drop by, follow these steps and be confident your home receives an accurate valuation.
• First, conduct a physical inspection of the property noting down the condition and any improvements made. While a local property professional can offer an estimate of your home’s value based on recent sales in the area, a little research can also help you gauge the value of your property yourself.
• Research recent sales in the area and look for homes that have similar features to your own. This information is readily available online. As market conditions change regularly, it’s best not to look at anything that sold more than six months ago. It’s likely these properties will not provide an accurate indication of your property’s current value.
• Once you have a number of properties to compare your house against, start rating them based on whether they are superior or inferior. Remember to consider features both of the land and the property itself as well as location and amenities nearby. You should now have a good idea of the approximate value of your property and this will be extremely useful when the time comes to call in a professional.
If the valuer comes back with a number that is not within the range you had expected, you will have evidence to challenge the valuation which may ultimately allow you to receive a more desirable outcome.
For more information on valuing your own property, or to discuss your broader financial future, give us a call today.