{"id":2255,"date":"2022-04-02T06:52:37","date_gmt":"2022-04-02T06:52:37","guid":{"rendered":"https:\/\/royabhishek.in\/urbanbuyer\/how-do-valuers-assess-property-values\/"},"modified":"2022-04-02T06:52:37","modified_gmt":"2022-04-02T06:52:37","slug":"how-do-valuers-assess-property-values","status":"publish","type":"post","link":"https:\/\/royabhishek.in\/urbanbuyer\/how-do-valuers-assess-property-values\/","title":{"rendered":"How do valuers assess property values"},"content":{"rendered":"

[ad_1]
\n<\/p>\n

\n
\n

Please use the menu below to navigate to any article section:<\/p>\n<\/div>\n

When it comes time to draw on your portfolio\u2019s hard-won equity for re-investment, there\u2019s no escaping the valuation process.<\/strong><\/p>\n

\"MelbourneWhile there are a number of professionals who can give you a reasonable idea of what your holding is worth, the one that counts most is the registered property valuer because banks rely on their opinion before approving your loan.<\/p>\n

Valuers have always been around, but what they actually do and the elements they look for in a home remain somewhat of a mystery to the average property investor.<\/p>\n

And that\u2019s why understanding their process can help you add much-needed dollars to your worth.<\/p>\n

So, how do property valuers assess a property\u2019s value?<\/p>\n

It\u2019s a process<\/span><\/h2>\n

Property valuers hold professional qualifications and are registered with State authorities to conduct assessments that can be relied on by their clients.<\/p>\n

They will also be affiliated with a professional body such as the Australian Property Institute or the international body, the Royal Institute of Chartered Surveyors.<\/p>\n

All this is to say they are legally liable for the service they provide and must prove their opinion stands up to the scrutiny of a courtroom.<\/p>\n

Valuers will therefore follow strict processes and guidelines to ensure they\u2019re on the money.<\/p>\n

The key is the definition of market value space which case law defines as:<\/p>\n

The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm\u2019s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently, and without compulsion.<\/em><\/p>\n

There are arguable points within this definition, but basically, the valuer is assessing what your home should sell for in its \u201cas is\u201d condition at a specific date and time if it had been openly and fairly marketed.<\/p>\n

Knowing this shows why valuers won\u2019t predict future property value movements based on musings about market direction or what renovations and improvements you hope to carry out.<\/p>\n

It\u2019s a \u201chere and now\u201d event in their eyes.<\/p>\n

1. The inspection<\/span><\/h2>\n

A property is typically inspected and viewed by a valuer as three interrelated elements.<\/p>\n

Land<\/strong> \u2013 Location, position, aspect, size, dimension, and topography are all considered by the valuer. \"Building<\/p>\n

They are looking for all the pros and cons across these, and other, components.<\/p>\n

Dwelling<\/strong> \u2013 Age, size, construction, layout, accommodation, condition, utility. Again, the valuer is wandering through your home and taking in what a typical buyer would consider a plus and a minus.<\/p>\n

Ancillary (or site) improvements<\/strong> \u2013 Fencing, landscaping, driveway, pool, shed pathways, tennis courts, and any other extra constructions separate from the dwelling.<\/p>\n

A valuer will progressively work through these three elements of your holding, taking note by sight and use of measurements to complete a comprehensive and descriptive picture of your holding.<\/p>\n

They will also rely on data from various other sources around town planning and location.<\/p>\n

2. The sales evidence<\/span><\/h2>\n

The basic, primary method of assessment is called the Market Approach and it simply relies on comparing your property to other properties that have sold in your area recently.<\/p>\n

By use of databases, listing portals, and their local agent contacts, a valuer will gather three-to-six property sales that are nearby, recent, and similar to your home and research the attributes of those properties. \"Sales<\/p>\n

The valuer\u2019s skill through their experience, art, and science is in determining by how much in dollar terms your property is better or worse than the comparables.<\/p>\n

The house next door sold last week for $700,000, but is smaller, older, and doesn\u2019t have a pool?<\/p>\n

Yours is worth a certain amount more than that.<\/strong><\/p>\n

An identical house across the road sold for $825,000 but on a bigger block with better views?<\/p>\n

Yours is worthless.<\/p>\n

This progressive comparison across a collection of reasonable sales soon provides a tight range of value that gives a fair indication of what you should achieve.<\/p>\n

There are other approaches to this valuation that help double-check the figure, but using comparable sales is considered the preeminent approach.<\/p>\n

3. The report<\/span><\/h2>\n

With all this information collated, the valuer will now send a report to the banks.\u00a0\"analyzing-Reports\"<\/p>\n

It\u2019s important to realise that along with the figure, the valuer will be asked to comment on any risks associated with the property itself or the market it\u2019s in.<\/p>\n

For example, if high tension power lines traverse your lot, they will rate a mention. <\/strong><\/p>\n

If you\u2019re in a single industry town and things are looking a bit dire for the major employer, expect that to be part of the report.<\/p>\n

In some instances, risk ratings can have as much impact as the figure when it comes to whether or not you\u2019re approved for a loan.<\/p>\n

Valuations are key to building a portfolio but getting the best result possible depends on your understanding of the valuation process and identifying ways to improve your outcome.<\/p>\n

NOW READ:<\/span><\/strong><\/p>\n