If you’re looking to buy or sell a property, or you just want to know how much your place is worth, it is important that you understand the difference between a property valuation and a real estate agent’s appraisal.
What is a Property Valuation?
A property valuation is a detailed report of a property’s market value, defined by the International Valuation Standards Council as the estimated sale price “between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.
It’s almost impossible to predict how people’s emotions, market knowledge and other motivations might impact negotiations. So, the final sale price can be quite different from the valuation in the report.
A property valuation benefits a buyer and a seller. By detailing a property’s market value, a property valuation reduces a buyer’s risk of paying over the odds for a property. By offering a detailed analysis of a property’s weaknesses, it can help a seller decide which renovations to make to enhance its value.
When do you Need a Property Valuation?
The most common reason that people need a property valuation is because their mortgage lender requests one to ensure the value of the property covers the loan if the buyer defaults on their mortgage. The valuation is usually performed by an independent valuation company who will visit the property to assess it in person.
Property valuations are also required for financial reporting, for taxation compliance, for family law mediation and for determining the amount of compensation given to land owners for easements or land acquisition.
The Difference Between a Property Valuation and an Appraisal
Appraisals by real estate agents have no legal standing and should only be considered as a guide. Agents will offer a free appraisal of your property when trying to win your business. They base their valuation on recent sales in the area and on their experience.
Licensed valuers, on the other hand, charge a fee for their service and they base their appraisal on facts. They are legally responsible for the information provided and therefore, their valuations are more comprehensive than a real estate agent’s appraisal.
Get Your FREE Property Insights Report
If you are thinking of selling your home or property but not yet ready to pay for a property valuation, I can provide you with a FREE comprehensive 21-page Bondi Broker Property Insights Report. Included in the report is a broad range of information providing valuable insights such as property price estimations, recent comparable sales, suburb statistics and more based on the latest data available.
To order your FREE Property Insights Report, go to my website to fill in an order form and I will email you as soon as possible with your personalised report. Alternatively, for more information you contact me directly.