How a property valuation and sales appraisal differ
05 April 2019
|4 Minuites Read
Knowing the difference is vital for all with prospective interests in property
Selling any property is going to be a long and complicated process. There are many different steps that, as a seller, you need to be prepared for.
Because of this, it is important to have a good grasp of the different aspects of selling and why they are important.
Two aspects that are similar are a property valuation and a market appraisal. Understanding them and how they are different is something that should be known by any prospective seller.
In previous content, we’ve talked about the importance of a sales appraisal when selling your property.
Given by a licensed real estate agent, they will use their knowledge of the local area and recent sales in to provide a guide on a potential selling price.
It is a fantastic way to get an early gauge as to how your property will perform on the market and the type of return you may expect.
Often fore-thinking, it can consider different factors such as the time of year that it will be sold.
They can also give you advice as to what may improve your chances of your property performing better when being sold. For example, whether a fresh coat of coat of paint may help, should you use display furniture or if an auction or private sale will get you the best result.
It is, however, only an estimate and should not be thought of as a concrete estimate.
What is a property valuation?
A property valuation is a detailed report of a property’s market value.
It differs from an appraisal in that it determines a more accurate and recognised value of a property. It will come from an independent valuer who will have an impartial point of view.
The process is quite complex and therefore, in some Australian states a formal valuation can only be conducted by a qualified valuer who has completed the necessary training and education.
By using a qualified and experienced valuer, you are guaranteeing that the figure you are being quoted is accurate, reliable and will stand up in court.
A property valuation, unlike a market appraisal, is a formal process that can be called upon for legal purposes if needed.
A property valuation will also cost money. They can range from $300 to $500 depending on the valuer and their level of experience.
What affects property valuations?
There are many factors that can influence how a property’s valuation will go.
Some things that are considered are the physical structure and condition of the property, its suburb and any prospective unique characteristics.
The following are vital and can also be considered
Property appearance and fittings
Access for pedestrians, vehicles
Local council zoning
Any negative aspects to the property.
How are they conducted?
A property valuation can involve a visit to the property. During this visit, a valuer will apply their knowledge and skills to produce a final valuation. It will then be documented and provided to you via report.
Valuations are done when requested for specific purposes, such as property settlement or getting finance for a home loan.
It can be best to have your own conducted for the best results and not to rely on any other valuations that have been conducted in the past or by another person.
Property valuations, much like market appraisals, are influenced by subjective elements and personal experience. These can influence any processes that allow for a valuation to be conducted.
Thanks to technology, there has been a shift towards computer generated property valuations. Using large amounts of sales data, predictions and calculations can be made that have quantifiable evidence to back them up.
Therefore, if the value of your property differs from your expectations, it may be worthwhile to seek a second opinion.
For the most part, the value of your property will potentially be influenced by factors that you can’t change or have little control over.
However, there are certain things you can do to make the best of your property’s valuation.
Ensure that your property is neat and tidy, inside and out. Doing this will reflect positively in your property valuation and can provide a potential boost to its value.
If you have made improvements that are noteworthy, provide the valuer with specifics like what the changes entailed.
Your property, your returns
Every investor wants the best possible return on investment for the property portfolio. At Little Real Estate, our dedicated sales team that work hard for a smooth co-ordination of the sales process from start to finish.