A property appraisal is the process through which a real estate agent analyzes and estimates the projected sale price of your home according to their knowledge of the region, comparable transactions, and buyer demand. A property evaluation will normally consider ‘street appeal,’ the inside and exterior of the house, and the area of the land.
They’ll also check for features that increase the property’s worth, such as ducted air conditioning, high-quality appliances, and the amount of parking spots. The real estate agent will estimate the price based on these characteristics and comparable houses that have previously sold in the neighborhood.
An assessment is only an assessment, provided free of charge by real estate brokers, has no legal status, and should only be employed as a reference. This implies that it’s in a seller’s best advantage to get appraisals from two or three agents in order to acquire the most accurate estimate of how much the property will trade for.
When is a real estate appraisal required?
What exactly is a property valuation?
A property valuation is a formalized, thorough assessment completed by a certified practicing valuer (CPV) that assesses the market value of a property and evaluates it beyond its size and location. After inspecting the property in individual, a valuer will collate a valuation report that includes details about the urban development, the property’s condition, a review of the property’s land title to identify easements or liabilities, highlight the highest and best utilization of the property, and address any negative features about that property that may affect its value.
Risk ratings, on which the bank bases its decision-making, are an important aspect of the valuation process. Even if you have a favorable value number, you may still be denied a loan if the risk rating is too high for the bank’s tolerance.
Specifically stated, risk ratings are how a bank calculates the degree of risk associated with lending on a certain property. Risk ratings range from 1 (low) to 5 (extreme) (high risk). Depending on how risk-averse your lender is, a rating of 4 or 5 is unlikely to result in your loan application being approved. The location, land, environmental difficulties, the market for the area, expected future value, and even market sector circumstances and volatility are all included in these risk evaluations.
What exactly is a property valuation?
How to Get Ready for a Valuation
Beautify it
If a valuer visits at a home that is extremely filthy or in overall disrepair, they will think that the property is not being properly managed and that there may be hidden concerns.
As a result, guaranteeing that your property is not just in good shape but also highly attractive will go a long way toward increasing a valuer’s perception of the asset. If you can brighten up the outside with new paint, planted gardens, and a new fence, these are all things to think about. They frequently give excellent value for money in terms of costs against value-added. The property, like prepping it for sale, must appear its finest.
Written notes
In today’s market, valuers are routinely completing several property inspections a day. While they are skilled in what to look for, characteristics are occasionally overlooked. If any hidden extras would increase the property’s appeal, like new ceiling insulation (which will reduce heating and cooling costs), a newly installed hot water system, or solar panels, present them to the valuer in writing so they can refer to them later when preparing the report.
It guarantees that they don’t overlook anything throughout their debates.
Get the timing perfect
Organize for the valuation to be performed at a period when the property is at its finest. For instance, in the middle of the day when there is a lot of natural light flooding the rooms. This is especially crucial if you live in a school zone, where parking might be difficult to come by for drop-off or pick-up. If your property is near a busy road, try to avoid valuation assessments during rush hour to keep the decibel count low.
Attendance
None surpasses your understanding of the property, so be available when the valuer arrives to answer questions or point out aspects that they may have missed during their examination. You are suggested to avoid following them about the property since it slows them down and becomes bothersome. However, at the end of their assessment, they should be able to identify any extra factors that may improve the outcome.
Be helpful, but not domineering.
Make a comparison
Although it’s accurate that real estate assessments aren’t deemed strong enough for lenders or courts, if you ask two or three agents to make a valuation, along with a comparative market analysis (CMA), you should obtain a very realistic range of estimates for how much the property may sell for. This should be compared to the valuation report. It will ideally fit within the range, or it will explain why it is beyond it.
Furthermore, if you have recent comparable sales information that supports the outcome of your property, document it and present it to the valuer. There might be sales proof that has come to light that they are unaware of. If you are the client and the valuation shocks you, talk to your lender about it. They should be able to explain how the valuer arrived at their conclusions, giving you the chance to resolve any flaws before the next valuation.
Reference:
“What is the difference between a valuation and an appraisal?” by Steffi Sendecki
“Maximise your valuation outcome” by Andrew Mirams
