For property owners, investors, and anyone else with a vested interest in real estate, property valuations are an important tool. A property valuation is a reliable method of finding the market value for a subject property.
The valuation comes in the form of a detailed report outlining the property’s current worth. The scope and detail included will depend on its purpose. A property valuation in NSW is a tried and tested method of determining precise market value.
A report that clearly outlines market value is hugely beneficial in all sorts of circumstances. As the real estate market goes through constant and often sudden change; the insight gained from valuations are crucial for effective decision-making.
We’ll go through some of the most important points you should remember regarding property valuation services.
Who can prepare property valuation reports?
In NSW, only Certified Practising Valuers (CPV) who are registered with the Australian Property Institute (API) can prepare sworn property valuation reports. A CPV is an independent professional with no link to any sort of financial institution or real estate agency. As such, there is no risk of internal bias or outside influence impacting the reports.
CPVs have been trained in the art of examining real estate. They have access to important databases and understand exactly what makes a property valuable.
CPVs are also committed to meeting International Valuation Standards (IVS) across every report. These are globally-recognised valuation standards overseen by the International Valuations Standards Council (IVSC).
The difference between property valuations and real estate appraisals
While appraisals may seem like a more affordable option for determining market value, there are key differences you need to keep in mind. There is a reason many people opt for property valuation reports instead.
A real estate appraisal is a service provided by realtors to estimate the market value of a subject property. Realtors have an inherent interest in the market value of a home as they stand to earn a commission on its sale; this means there is an internal bias at play that may impact the final figure.
With property valuations, reports are prepared from an entirely unbiased and objective point of view as CPVs only intention is to find precise market value. In general, the standard of precision for valuation reports is much higher than that of appraisals.
An appraisal is also only accepted as an estimation, and not seen as definitive proof of value. An independent property valuation, on the other hand, is legally recognised and accepted as the official market value of the subject property.
All in all, independent property valuation reports come with a much higher standard of legitimacy and accuracy. Valuation reports can therefore be used in a range of private, business, and legal circumstances.
The types of valuation services
A range of valuation services exist, and valuers determine suitability in accordance with the client’s needs. Valuations can come in:
- Short-form reports
- Long-form reports
A long-form report is essentially a more complete version of the short-form report. The same factors are considered, but the long-form delves into more comprehensive detail. This isn’t to say that long-form reports are more accurate; both reports are highly accurate, but long-form reports will provide clients with a more detailed explanation.
Valuations can also be divided into:
- Full-service valuations: A full valuation involves a meticulous physical inspection of the property. Valuers take measurements, capture photographs, and review a number of key factors when preparing reports.
- Kerbside valuations: Also known as drive-by valuations, CPVs review the outside of the house without going inside. The rest of the information is accessed via property databases for the preparation of the valuation report.
- Desktop valuation: This is essentially an online valuation service. Valuers look at property and market databases covering recent sales and market trends to prepare reports.
What factors do valuers consider?
Qualified valuers are careful to consider every relevant internal and external factor when preparing property valuation reports. A few of the main considerations valuers review to determine market value are:
Location
Location is critical to value. What is nearby such as schools, shops and parks are major deciding factors for potential buyers, thus influencing the demand. Other local factors affecting value include crime and employment rates.
Size and space
The size and space available on a property naturally has a heavy influence on market value. A larger property with a few rooms is attractive to families and young couples looking to start a family. As far as space goes, layout and storage are most important.
Age and condition of the building
Valuers will meticulously examine the existing state of the building. Signs of deterioration or weak materials negatively impacts the property’s final value. A well-maintained building that shows no clear sign of neglect or deterioration will be worth more.
Kerbside appeal
The entrance of your home, or the kerbside, serves as its front page. The kerb is the first thing potential buyers and investors see; highlighting the importance of maintaining your home's outside presentation. A neat lawn, spacious driveway, and attractive entrance will improve final market value.
Market conditions
CPVs are well-versed in the state of the market and have to carefully review the existing conditions when preparing valuation reports. Valuers will look at sales trends, interest rates, supply and demand, affordability, and economic growth to gain insight into the state of the market.
How much do property valuations cost?
As valuations are professional services performed by highly qualified experts, they come at a cost. No single universal fee exists for valuations, and how much you end up paying will depend on a few different factors.
The cost of a valuation report will be affected by:
- The size of the property.
- The type of property.
- The scope and detail needed.
- The location of the property.
- The experience of the valuer.
A larger property that requires a more comprehensive inspection will likely have a higher valuation cost than that of a small apartment. In general, it’s also more expensive to purchase a commercial property valuation, as it involves additional and more complex calculations.
Requesting a quote from a reliable valuation firm can provide you with key guidance on how much you’re likely to pay for the service. Quotes outline the pricing structure and provide insight into the probable costs.
Summary
In NSW, property valuations are one of the most important services available for property owners and investors. A valuation report is essentially a document that outlines the market value of a property in accordance with the existing conditions.
Reports are prepared by Certified Practising Valuers registered with the Australian Property Institute. CPVs are experienced, qualified and skilled property specialists; trained in the art of reviewing real estate.
Independent valuation reports are far more accurate and beneficial than real estate appraisals. A valuation report is a legally-accepted recognition of value, an appraisal is merely seen as an estimation.
Valuation reports can come in short-form and long-form. Services can be divided into full-service valuations, kerbside valuations, and desktop valuations. CPVS go through several factors when preparing reports, including location, size, space, age and condition, street appeal, and market conditions.
If you would like to learn more about the ins and outs of property valuation services, feel free to give us a call today and speak to one of our qualified experts.
