Buying or selling a home? Then you’ll likely be left wondering what to do after a property valuation has been taken out.
In 2020, there was a 15% increase in property valuations in Australia compared to the previous year, proving they’re an integral part of the home-buying puzzle.
But once you have one, what do you do with it? Once you’ve got your valuation in hand, you might find it bursting with complex jargon and challenging data, so let’s help you decode it.
How to Read a Property Valuation
Valuing a property might seem like a mammoth task, but it’s essentially a blend of factors, market trends, and professional insight.
Remember: Understanding the property valuation process is key to confidently navigating the real estate market. So stick with us, we promise it’ll be worth your while.
Valuation Criteria: How a Property is Valued
When determining the worth of a property, Australian property valuers consider a broad range of features associated with your home. Here’s a short overview of some criteria they take into account in the process:
- Location: This means more than just the suburb or city you’re in, but also the particular street and position of the property. Factors like proximity to amenities, schools and transport also play a role.
- Property Size: The size of your land and the actual building will greatly impact the value. Larger properties tend to be worth more.
- Architecture and Layout: The age, style and layout of your home also influence its appraisal. A property with a modern, versatile design is likely to fetch a higher purchase price from the buyer.
- Condition: The existing condition of your property is super important. Any signs of structural damage or areas needing significant repairs can lower its value.
- Renovation & Improvements: If you’ve made recent improvements, such as a renovated kitchen or an added deck, these enhancements can add to your property’s value.
Valuations can differ between valuers. This is because the above criteria can be subjective, and current market trends and conditions can also influence the assessment.
Understanding the Market Value
Did you know over 60% of Australian homeowners opt for a property valuation before selling their home?
That’s because it’s important to know the details that make your property so valuable, including the market value of your home and whether it’s worth much in the current real estate market in Australia.
This figure is determined by looking at previous and recent sales of similar properties in your area and the current market conditions.
Remember that the market value is an estimate, and the actual price your home could sell for may be different. Additionally, this value can fluctuate due to changes in the real estate market, so it’s more of a snapshot in time.
This part of your valuation presents crucial details about your property. It includes your location, size, number of bedrooms and bathrooms, and any unique features like a private swimming pool. This plays an important role in the valuation because buyers in Australia might particularly value some features, such as an ample garden or proximity to school districts.
Comparative Market Analysis (CMA)
The valuer compares your property to similar ones that have been recently sold within your region. The CMA helps establish a reasonable price range for your property in the current market condition and clearly indicates how your home stacks up against the competition.
The state of your property greatly influences its estimated market value. Brands of appliances, the age of your home, renovations, defects (if any), and overall maintenance are all considered under this section. Any major repairs or renovations can significantly increase or decrease your property’s value.
The Valuation Summary
This is where all noted observations, assessments, data, and analyses combine to provide a final estimated value for your property. Remember that this is a professional’s well-informed opinion based on available data, not a guaranteed selling price.
Understanding your property valuation can feel daunting initially, but taking the time to decipher all these aspects can provide you with a comprehensive picture of your home’s value and potential in the Australian market.
What Happens After an Independent Valuation?
What’s next, you ask? The particulars differ depending on whether you’re dealing with a purchase, sale, or refinancing situation. However, some key points generally apply across all these circumstances. Here’s what you can usually expect:
Receipt of Valuation Report: Usually, after the valuation process, you’ll receive a comprehensive report. This document will detail your home value and explain precisely the factors determining it. Such factors could include the property’s location, condition, local market trends, and any significant improvements to the house.
Lender Review: If you initiated the property or bank valuation because of a home loan refinance, your lender will review the resulting valuation report around this time. Most importantly, they want to be sure the loan amount you’re looking for is indeed reasonable, given the value. If the lender is satisfied with the correlation, they will proceed with the loan documents, and you can inform your loan real estate agent.
Fuel for Negotiation: For those in the process of selling or buying, the valuation can be a handy tool for negotiation. Sellers may leverage a higher-than-expected valuation against buyers who initially underestimated the value. Simultaneously, buyers may use lower valuations to negotiate a reduced price or better terms.
Your Action Plan Post-Property Valuation
Understanding and Acting on Your Valuation
Now that you’ve got the figures in hand, the first step is to really understand what they mean. Don’t fret if the numbers aren’t what you expected – remember, the value is determined based on facts and data that evaluators have crunched.
Importantly, this valuation is a snapshot in time, so it’s important to understand that it can change from one month to another as the economy and market trends shift.
Planning Your Next Steps
- If you’re selling: Use the valuation as a guidepost to price your home accurately. It can assist you in setting a realistic selling price that aligns with the current market and attracts potential buyers, and is extremely handy when dealing with real estate agents.
- If you’re buying: Nearly 20% of property valuations are requested by those looking to buy. A property valuation helps you determine if the asking price is fair. The result can steer your negotiation tactics and enhance your purchasing power, helping you land an offer that truly represents the property’s worth.
- If you’re refinancing: Lower than expected results may mean you should rethink your plans. You may have less equity than you originally thought, affecting the amount you can borrow and the interest rates you can secure.
Remember, the market valuation isn’t the end of the road. There’s always room for improvement. If your valuation seems low, consider improvements or renovations that could increase your property’s value. Remember that not all improvements necessarily pay off, so conducting thorough market research and consulting with experts is crucial.
Finally, keep an eye on the property market. Understanding the trends and what’s going on with comparable properties can give you an edge when negotiating prices, whether you are a buyer, seller, or homeowner considering refinancing.
Staying informed will ensure that you are not caught unaware when you get your own valuation and are always ready to make smart, informed real estate decisions.
What If You’re Not Happy with Your Property Valuation?
Feeling slightly disappointed is normal if your valuation doesn’t come up to what you expected. But that’s okay. Remember, it’s not the end of the world. You have several options at your disposal. Here’s how you can navigate such a situation:
Seek a second opinion
Firstly, don’t panic. If you’re unsatisfied with the valuation, consider getting a second opinion. For example, the team at Duo Tax can help you assess whether your initial valuation is accurate or not. Just get in touch, and we’ll guide you through the process.
Be mindful that different experts might evaluate your home differently. It’s worth shopping around and finding an independent valuer who understands your property’s unique features and value.
You can always negotiate with your prospective buyer. They might agree to a higher price if they like your home and see its real value beyond the numbers.
Improve your property
Another option is to make improvements to your home and the property’s structure before re-valuing it. Small upgrades, like refreshing the paint, or refitting fixtures and fittings, can significantly increase how much more money you can get. Similarly, more extensive renovations, like updating the kitchen or adding a bathroom, can also lead to a higher overall value.
Sometimes, it may be advantageous to hold off on selling your property. The real estate market fluctuates, and waiting for a time when prices increase could result in a higher valuation. However, this option requires patience and may not be suitable if you need to sell quickly.
Challenge the valuation
Lastly, you can challenge the valuation if you believe the valuer made an incorrect assessment. You’ll need to provide evidence demonstrating why the valuation was inaccurate and highlight any notable features of your property that weren’t considered.
Remember, the valuation is only one part of selling your property. There are other ways to present your home in a light that truly reflects its worth. After all, your property is more than just a number; it’s a place full of memories, charm and potential, all waiting to be discovered by the right buyer.
- A property valuation is a significant step in determining the market value of your property in Australia.
- Understanding your valuation can help you make informed decisions about your home- whether to sell, buy or even negotiate rent.
- After your property valuation, continue to stay proactive, monitor market trends and conditions, and be ready to adjust your plans as needed.
- Making sense of your property valuation involves understanding the factors and criteria used in the assessment.
- If you’re not content with your given valuation, you have several options: seek a second opinion from Duo Tax, negotiate with your valuation firm, take steps to improve your ROI, wait for market conditions to improve, or challenge the valuation in court.