An accurate value assessment is key to getting a fair price for your home. It’s also imperative in the context of life’s biggest refinancing, insurance, and investment decisions.
So when it comes time to get one, you want to ensure you do it right. This article will show you how – from the basics of how property valuations work to tips on selecting a qualified appraiser.
To get a more holistic view on this topic, our dedicated article on how to evaluate a house is a must-read. It complements the information you’re currently exploring!
Understanding Property Valuation
Let’s start off by covering the basics – what is a property valuation, and why does it matter? Sometimes referred to as an appraisal, this practice is used to determine the market value of a property or asset, typically for sale, mortgage lending, taxation or other legal purposes.
In this way it provides an objective estimate of what a buyer can expect to pay for the property they are interested in.
Appraisals are unique in that they require an in-person assessment of the property in question to work. Every home is different, with a range of factors being capable of influencing the final valuation.
These include…
Location:
The location of a property can make or break its value. Areas with higher demand, such as good school districts and lower crime rates tend to command higher prices than those in more rural areas or where the infrastructure is not as strong.
Condition:
A property’s condition will also play a major role in its valuation – both inside and outside. Any damage done to the structure, plumbing, wiring etc., should be taken into account when estimating market value.
Home Features:
The features of a property are important, with certain features adding value to its market price. This could include things like an extra bedroom or bathroom, a pool or other luxury feature such as an outdoor kitchen. The age and condition of any appliances within the home will also be taken into account when appraising it.
Size:
The size of a property can have a noticeable effect on its value. Generally speaking, larger homes tend to command higher prices than smaller properties in the same area.
Comparable Sales and Market Trends:
Like the value of stocks, real estate prices fluctuate. Studying recent market trends and looking at comparable sales will give you a good indication of what your home could be worth at any given point in time.
Of course, all of the above factors play into one final variable – the property valuer you work with. While accuracy is always the ultimate goal, an experienced and well-informed professional is more likely to see the full breadth of your home’s worth.
Benefits of Getting a Property Valuation
Property valuations aren’t just some technicality that can be overlooked during the home sale or purchase process. It has immeasurable of benefits, like:
Added Context
A professional valuation gives you a much better understanding of your property’s worth and allows you to make more informed decisions about the sale or purchase price. For example, if the market value for comparable homes in your area is $400,000 and your valuation comes in at $420,000, you’ll know that you have an above-average product to sell.
More Accurate Listings
Getting an accurate property valuation is also essential for setting realistic listing prices on your home when selling it (or budgeting correctly if you’re purchasing one).
Negotiating Power
Having a professional property valuation also allows you to negotiate confidently, knowing that your asking price is based on market value and recent sales. This can be especially beneficial in competitive real estate markets where the demand is high but the supply is low.
Getting Started With a Property Valuation
When you’re ready to finally find out what kind of numbers you’re working with, take the first step of the process by calling a professional property valuation company.
While real estate agents and online tools can be helpful starting points, you’ll want the insight of a professional appraiser to give you an accurate picture of the market value of your property.
Professional appraisers are not only experienced and knowledgeable, they also have access to more detailed information about the local housing market, such as recent sales in the area.
When using a professional appraiser, make sure to look for someone who is certified in the state you are in. Ask questions about their experience and qualifications before signing a contract. You should also make sure they understand the type of valuation you need and have the necessary expertise to provide it.
Broken down piece-by-piece, these are the steps you’ll need to take:
- Research local professionals and find one that fits your needs.
- Schedule a meeting with the appraiser and discuss exactly what type of service you need.
- Give the appraiser access to your property and any other information they may need, such as recent sales figures in the area or a floor plan of your building.
- Wait for results- it usually takes between two and four weeks to receive the final report.
- Review the results with your appraiser so you can understand them fully and take any necessary next steps.
Curious about bank valuations? Read our article on How Often Do Bank Valuations Come in Low? for a deeper dive.
Make the Most of Your Valuation By Providing Accurate Information
Working with a professional is an important part of getting an accurate assessment, but it’s not the only thing capable of influencing it.
Ultimately, whoever you choose to value your property will need accurate information from you in order to provide an accurate report.
It is therefore important that you provide as much detail about the property and its features as possible.
This should include details such as square footage, number of bedrooms/bathrooms, age of construction, any upgrades/improvements made to the property, and so on.
An experienced appraiser will be able to draw up a list of documents that should be provided such as deeds of ownership or title insurance documents.
Suggested Reading: What Happens If Bank Valuation Is Higher Than Purchase Price?
In Closing
You can’t understate the importance of property valuation, especially when something as important as the purchase or sale of a home is on the line.
So don’t compromise! Enlisting the help of a professional and qualified team will ensure your home valuation reflects the true value of your property, and will give you peace of mind when negotiating any kind of transaction.
