What is a valuation? Valuations are used to determine the value of property as directed by a qualified independent valuer who has no financial stake in the property – other than the fee they charge for their service.
What is valuation?
Valuations are used to determine the value of property as directed by a qualified independent valuer who has no financial stake in the property – other than the fee they charge for their service.
Valuations can be conducted for almost all property types and for many different reasons.
As a recognized legal document, valuations are accepted by lenders as a risk management tool and the courts as a legal document that can be relied on in cases of mediation and litigation.
More commonly though valuations are used by individuals to assess the market value of a property, either before they sell or before they buy. Property transactions are a stressful and emotional experience regardless of whether you are selling or buying.
The independence of a professional property valuation can take a little emotion and stress out of the process for a fraction of the cost of the property, providing you with peace of mind and a basis upon which to negotiate a fair price.
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How much does a valuation cost?
Valuation fees can vary according to many factors ranging from the type of property, the purpose of the report and report format itself. The cost of a valuation can be tax deductable if it is used for an investment property.
All in all, valuation fees represent a very small portion of your total property investment and have the added benefit of ensuring you don’t sell your property too cheaply, or you do not pay too much for your next property.
A pre-sale or pre-purchase valuation can cost little as $300 + GST*.
* Costs may vary depending on location, complexity, report type and other factors
How long will it take to complete a valuation?
Generally, valuation reports for non legal purposes (i.e. out of court use) can usually be completed in a little as 48 hours for standard residential properties in a metropolitan area. However, complex commercial, industrial or rural holdings can take longer.
What is the difference between a real estate agent’s appraisal and a valuation?
An independent valuation is recognised as a legal document.
Because the value is determined by an independent and qualified professional, recognised by the courts and lenders as being an expert in their field, and because the valuation is based on fee for service, the independence and validity of the value determined can be assured.
On the other hand, a real estate agent’s appraisal can still be highly useful in providing an indication of the value of a property, but its uses are generally limited to personal information or marketing purposes only.
Real estate agents who provide appraisals generally do so when they are seeking to list a property for sale. It’s not unreasonable to assume that at this point in time, the Agent may be inclined to provide an optimistic view of the property’s value in order to secure the listing.
When the courts are seeking to determine the value of a property they don’t appoint a real estate agent, they appoint a qualified, professional, independent Valuer as the “expert witness”.
What qualifications does a valuer have?
A valuer must complete relevant tertiary level qualifications to be eligible for either licensing or registration by the appropriate state body to practice as a qualified valuer.
Only qualified valuers are recognised by courts of law as expert interpreters of the property market.
There are several levels of valuer qualifications all of which are dependant on the level of experience, area of specialisation and accreditation attained through the professional body of the Australian Property Institute (API).
The two main levels of accreditation recognised by the API are a Certified Practising Valuer (CPV) and Residential Practicing Valuer (RPV).
What are the different purposes that valuation reports can be prepared for, and why is this important?
Each and every valuation is prepared for a specific ‘purpose’. It is important to realise that a valuation prepared for one purpose is not likely to be suitable for any other purpose and report should include a statement to this effect.
The most common purposes are financial (Mortgage Security) and Pre-sale or Pre-purchase. Other purposes can include, but are not limited to, Taxation, Accounting, Legal, Matrimonial and Asset Management.
It’s important to understand what the differences are and how each of these may affect you.
Some other valuation types include:
-Mortgage / Refinancing Valuation
-Family Law Valuation
-Self-Managed Superannuation Fund Valuations
-Body Corporate / Insurance Valuations
-Capital Gains Tax Valuations
-GST (Margin Scheme) Valuations
-Stamp Duty Valuation
-Estate / Probate Valuation
-Litigation & Dispute Valuations
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