Who is responsible for your property valuation?
Property valuations are fair and meticulous real estate assessments to establish market value. NSW property valuers are responsible for conducting all manner of property valuation services. They are accredited by organisations such as the Australian Property Institute (API) and the Australian Valuers Standards Board (AVSB) which are regulatory authorities on standardised valuations. Qualified valuers go through extensive training and have to acquire the right qualifications to be considered certified valuers.
Although, real estate agents are not certified valuers they do supply appraisals. This would consist of an initial estimate of a property’s value using their knowledge of the real estate market. Though their assessments should only be considered with caution. This assessment is usually done in a very informal way. However, you stand to gain more trouble than assistance from relying on it as an official appraisal.
They are not trained with the knowledge or equipped with the experience or tools required for a formal valuation that can be used as a legal document. It’s significantly important to understand that fundamentally, only certified valuers or valuations companies can supply a sworn valuation.
Property valuation regulation standards explained
To help you understand how valuations maintain consistency, here's an outline of the requirements necessary to complete one. All residential or commercial property valuations have to be conducted using standardised criteria. These guidelines are tailored to ensure ethical conduct and professionalism.
Firstly, property valuers have to meet very specific tertiary qualifications and receive 2 years of experience under the supervision of a certified valuer. They continue ongoing professional development to enhance their skills throughout their career.
Impartiality is stressed as a standard requirement for a valuer. They must remain free of any conflict of interest to supply unbiased results. They’re required to disclose any possible conflict of interest should they believe it will influence objectivity.
There are specific valuation methodologies and approaches prescribed and designed for different types of valuations. They include:
- The sales comparison approach
- Cost approach and
- Income approach.
Accurate data and market analysis form the basis of a valuers assessment outcome. Some of what they need to consider are market conditions, land usage regulations and economic circumstances. Finally, the valuation report is compiled justifying how their conclusion was reached.
The report must include supporting data, methods used and the valuer's professional opinion. To ensure professionalism and effectiveness, firms and valuers receive regular audits to assure they’re meeting regulation standards.
How is a property valuation accurately performed?
Accurate appraisals are effectively maintained by performing the following activities thoroughly:
- Property Inspection: An inspection includes an examination of the condition, amenities and any upgrades to the property. This provides a valuer better understanding of the property’s attributes and how they may affect value.
- Market Analysis: An analysis of the property market like current sales data, property trends, and economic conditions. This provides insight into how the real estate would be valued in the current market.
- Valuation Methods: An appropriate value approach is applied based on the type of valuation required. This could include the sales comparison approach, cost approach, and income approach.
- Comparable Sales: This involves the analysis of recent sales of similar properties in the area. Similarities influencing price are considered alongside differences that require value adjustments. Usually, factors like location, size and features are among those considered.
- Reconciliation: Results are obtained by weighing and reconciling what approach best serves the particular valuation.
- Reporting: A detailed report is drawn up including the supporting information, methods and final market value. This is drawn up in compliance with regulations.
- Ongoing Education: Valuers are continually developing their skills in regulations, market trends and any advancements in valuation procedures.
The importance of an accurate valuation
Accurate valuation informs your investment decisions, whether that’s buying or selling a commercial or residential property or getting a mortgage loan. It’s necessary for estate planning and establishing fair tax deductions and should it be necessary it can be used in legal disputes.
For example, understanding the value of your real estate investment aids in effective negotiating and educated financial decisions. You’re more likely to list real estate at a realistic value. A meticulous report can prevent overpricing that impedes a sale or under-pricing that leaves you at a disadvantage. Banks and lenders also require a valuation to approve a loan. A precise valuation increases the likelihood of receiving better loan terms. In addition, accurate valuations can help build a financial portfolio that makes planning the division of your assets easier. It also provides some insight into your tax liabilities.
Lastly, should any dispute occur during divorce or inheritance claims it can streamline an otherwise emotionally taxing situation.
Generally, a reliable property valuation supplies individuals with control over their finances and the confidence to handle them as they see fit. It’s a dependable guide to making good financial choices and optimising the value of your real estate assets.
Contact us for any further information about property valuations and we’ll be happy to assist.
