21 April 2021

The Ultimate Guide on Property Valuations

Written by Tuan Duong
Founder & Director

Property valuations are an essential part of the buying and selling process. 

Whether you’re in the market to buy a property or whether you’re looking to sell your current home, having a broad idea of the property’s value will help you establish: 

  • what you should be prepared to spend on the new property; or 
  • how the value of your current property has changed since you purchased it. 

Property valuations can also help identify your tax obligations. 

So, it’s worthwhile understanding the types of property valuations out there and how they can help you. 

Here’s what you need to know. 

What Are Property Valuations?

In short, property valuations identify the estimated amount you can expect a property to sell for in an arm’s length transaction. 

An arm’s length transaction is a transaction between two parties who don’t know each other and act in their own self-interest. 

Simply put, property valuations identify the approximate value that the market proposes your property is worth at that particular time. 

Property valuations are generally produced in report form and provide the following information: 

  • a detailed description of the property; 
  • how the valuation was conducted; 
  • market evidence of similar properties; and 
  • valuation calculations. 

When Would You Need a Property Valuation?

There are various reasons you could need a property valuation. For example, pre-purchase property valuations can help you decide how much to offer for a property you’re looking to buy. 

Stamp duty property valuations can help in instances where you’re transferring property between owners and ownership entities such as trust.  Stamp duty is already a massive expense when it comes to buying property, so we’ll provide fair market value calculations for stamp duty so that you’re not paying a cent more than you need to.

However, here are a few of the most common usages for property valuations. 

Property Valuations for Lenders (Bank Valuations)

The most common reason for obtaining a property valuation would be when a mortgage lender has requested a bank valuation report. 

Property valuations help mortgage brokers ensure that they can recover any purchaser’s debt if they default on their loan. So, essentially property valuations form part of their risk assessment.

Property Valuations for Tax Obligations

Another typical use of property valuations is to identify your tax obligations concerning that property. 

For example, a capital gains tax property valuation is required by the Australian Tax Office (ATO) to calculate the capital gain you may have made on the sale of your investment property.  

Another property valuation tool that is useful when it comes to determining your tax obligation is the market assessment valuation

A market assessment valuation is used to calculate how much tax will be levied on your property rather than estimating how much the property will sell for. 

A Property Valuer will determine the market assessment value by looking at several different factors like any improvements, repairs or renovations that have been undertaken on the property recently. 

We’ll also factor in the income that a homeowner gets from renting out the property and similarly price properties. 

The market assessment value is then used to establish how much tax will essentially be paid on a property. 

Property Valuations for Buyers and Sellers

Property valuations can be quite beneficial to both the buyer and seller in a property transaction. 

If you’re a buyer or seller, the property valuation you’ll want to get your hands on is a market valuation - which estimates the property’s value on the real estate market: 

  • For buyers: property valuations can reduce the risk of buying a property for more than it’s worth in terms of its market value. 
  • For sellers: property valuations provide an idea of a potential selling price. If you know what you could potentially earn from your property’s sale, you can decide on the best time to sell it. 

What Is the Difference Between Property Valuations and Property Appraisals?

A property appraisal is an informal valuation usually offered by a real estate agent free of charge. It’s generally based on recent sales statistics and is not legally enforceable. 

On the other hand, property valuations are conducted by qualified and licensed valuers who typically charge a fee for their valuation services. 

Property valuations are legally enforceable reports and are based on various factors assessed by the property valuer.  

For an accurate and fair valuation, you’ll want to consider seeking the services of an independent valuer who has no connection to the seller or the buyer or their real estate agent because they will have no vested interest in the property being valued. 

How Much Does a Property Valuation Cost?

The cost of a property valuation depends on: 

  • the independent property valuer’s rates; 
  • the size of the property; and 
  • the value of the property. 

However, you can expect most property valuations to cost anything between $300 and $600. 

What Property Factors Does a Valuer Consider?

To conduct a property valuation, a valuer will generally consider the following factors: 

  • the size of the property; 
  • number and type of bedrooms (for example, are there two bedrooms and one room better suited to a home office?); 
  • plan and equipment assets (such as the property’s fixtures and fittings); 
  • the building structure; 
  • location and surround amenities; 
  • local council zoning; 
  • recent sales in the same area; and 
  • market conditions. 

How To Get a Property Valuation?

Officially and legally recognised property valuations can only be offered by qualified valuers. 

At Duo Tax, we’ve assembled a team of property valuers who have been certified as practising valuers through the Australian Property Institute.

We provide a comprehensive suite of property valuation services across Australia designed to deliver reliable and affordable valuation reports for your property.

Key Takeaways

Property valuations help identify a particular home’s market value based on a realistic assessment of an expert valuer’s property and market conditions. 

Property valuations differ from property appraisals in that they are more comprehensive, legally enforceable and can be used to calculate: 

  • mortgage loan risks for lenders; 
  • stamp duty for property transfers; and 
  • capital gains tax on the sale of your property. 

If you’re a buyer or seller, you’ll want to get your hands on a property valuation report to help estimate the property’s value on the real estate market. 

At Duo Tax, our mission has always been to help property investors save money where they can. So,  we’ve decided to expand our services and offer property valuations. 

Thanks to our nationwide presence, we’re now offering a full range of property valuation services across Australia so that we can deliver reliable and affordable valuation reports for your property.

Get in touch with one of our friendly certified property valuers to discuss and organise your next property valuation today!

Disclaimer: Please note that every effort has been made to ensure that the information provided in this guide is accurate. You should note, however, that the information is intended as a guide only, providing an overview of general information available to property investors. This guide is not intended to be an exhaustive source of information and should not be seen to constitute legal or tax advice. You should, where necessary, seek a second professional opinion for any legal or tax issues raised in your investing affairs.
Tuan Duong is an award winning Quantity Surveyor and leads Duo Tax Quantity Surveyors – Australia’s fastest growing provider of Tax Depreciation. Reach out to him directly on 0431 154 356 or email tuan@duotax.com.au
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