Why does a home-owner need a market related valuation?
A property valuation is performed looking at recent sales during the last six months of the same type of properties in the same suburb as well as those competing properties currently on the market. By comparing the differences to the subject property, the market value is estimated.
A property valuation is essential in various situations and for the most part can be effectively performed by a Property Professional specialising in the specific suburb, knowing the local micro-market thoroughly. However, when applying for finance from a bank, ascertaining the value of a deceased estate or property settlement, a valuation by a professional independent valuer might be required. This service will attract a fee, but the person performing this task will be impartial; in fact, be totally disinterested whether you approve of the value he attached to your property.
The following situations may require a property valuation:
- Refinancing your home loan to access built-up equity. It's a safety net for the bank so that they don't loan you more than your property is worth.
- Planning for the renovation of or addition to your current property. It is very important not to over-capitalise, as buyers (when you decide to sell in future), may not particularly appreciate the renovation as it is something that they might not want, need or like.
- Buying a second property for investment. The equity and payment history on your primary residence (amongst other criteria) could motivate the bank to give you another loan.
- When purchasing a property very few buyers ask for a valuation or market analysis of the property they are interested in, probably because they think that the bank will value it in any case before granting a loan. Having an indication before making an offer could avoid severe disappointment when the application is declined due to the bank not finding enough value.
- Property valuations are an unavoidable part in selling a home and correct pricing is vital in the marketing process, because it
- stimulates buyers' interest
- increases advertising response;
- achieves maximum exposure in optimum time
- maintains seller's negotiating advantage
- creates an impression of comparatively good value
Once you know your property's value, you're in a better position to make informed financial decisions moving forward. It will definitely assist in having realistic expectations and avoid disappointment when receiving lower than expected offers, at the same time add to your excitement when receiving higher than expected offers!
For a free, no-obligation valuation of your property contact your nearest Huizemark office.
Author: Adrie Barnard