When you’re looking to purchase a property, there are a few key steps you need to take – from building inspections and pest reports to securing a loan. Another important aspect to consider is the valuation, especially if you plan on buying at auction. Are you wondering how a property’s value actually determined? Let’s take a closer look.
What house evaluations are used for
Valuations are important when you’re looking to purchase a property or assess the equity you have in your home. It is also used if you’re looking to refinance, equity can be used to make other purchases like investment properties, shares or home improvements. A professional valuer will give you an independent assessment of the property’s worth, which helps determine how much money the lender is willing to lend you.
Why house evaluations are important
A valuation is key if you’re thinking about buying a property at auction. It can help you set a spending limit and avoid overpaying. If you bid too much for a property, there may be a gap between what you have agreed to pay and what you can borrow.
You can hire an independent valuer, or get one through your lender.
What methods professional valuers use
There are two main methods that professional valuers use to appraise a property: the direct comparison method and the summation method.
The direct comparison method involve looking at recent sales of similar properties in your area, using them as a guide, and making adjustments up or down depending on any material differences between the properties.
The summation method involves determining the land value based on factors such as size, shape, location, views, and surrounding infrastructure. The value of improvements on the land (e.g., a house) is also determined, taking into account age, style, architectural features, and overall appearance. These two values are then added together to arrive at an accurate valuation.
Most professional property valuation companies use a combination of these two methods.
The valuation process
An assessor will first inspect the property. Then, the valuer will research the local market extensively and compare sales data of similar properties from the past six months. After that, the valuer will produce a written report. The entire process usually takes 48 hours.
If you’re interested in starting your search for a new home or investment property, or if you want to learn more about property valuations, please contact us. We’ll be happy to help you out.