Property Valuation FAQs
- What is an independent property valuation?
A valuer assesses the value of land, buildings, improvements and other factors that influence the value of your property, a process that usually involves an external and internal inspection of the property. Valuers are independent with no vested interest in the property they value. A valuation report is a legal document of the value of your property prepared for many different purposes:
Self Managed Superannuation Funds
Tax i.e. Capital Gains Tax, Probate
- How much does a valuation cost?
The cost of a valuation varies according to the location, size, value and importantly, type of the property to be valued, as well as the type of report required i.e. short form three page report or long form twenty-thirty page report that is more detailed and required particularly for mortgage, feasibility, family law or litigation purposes. The cost of a valuation is usually tax deductible if the property is held for investment purposes. The cost of this professional advice is relatively small compared to your investment and the potential savings and peace of mind it can provide you. Contact FVG offices to obtain a quote on your property.
- Is a valuation different from a real estate agent’s appraisal?
An independent valuation and a real estate agent’s appraisal are documents that area created for different purposes. An agent uses his expert local market knowledge to arrive at an opinion of a selling figure at which the property should be placed on the market, and sold. A valuation is a legal document and is carried out by a Certified Practising property valuer for a variety of clients including banks, solicitors, financial planners and individual property owners for a wide range of purposes.
A valuer must completed relevant tertiary level qualifications and be licensed or registered by the appropriate state body to practise as a certified practising valuer (CPV) or as a residential property valuer only (RPV). Only qualified valuers are recognised by courts of law and other professionals (including banks) as expert interpreters of the property market.
During a property valuation, a valuer must physically inspect the property, measure the land and satisfactorily identify it against the title or plan of subdivision. The appointed valuer will physically measure the house, take a description of its condition and improvements, take a photo and review a minimum of three comparable sales from which to conduct a sales analysis. This information is then used to determine the value of the property. The valuer will then prepare a written report based on his or her findings.
- How long is a valuation figure valid for?
A valuation is valid for a period of up to three months. But this can vary in a fast moving market.
- What are the key factors that contribute to a property’s value?
There are many factors which contribute to a property’s value the most influential of which is the land component. The land size, location, topography, shape and aspect can, in some instances, account for up to 70% of a property’s value. The land component will also appreciate where building structures will always depreciate.
Other factors which can influence the value of a property include architectural style and uniqueness, design and layout, potential for future development or renovation, the number of bedrooms and bathrooms, and the quality of fixtures and fittings, just to mention a few.
- What are some of the key attributes valuers look at?
When valuing a property a qualified property valuer will consider the following:
The land size, the aspect or views afforded by the property and the topography and layout of the block and house.
The size and layout of the building.
The location of the property in relation to schools, public transport, shops and amenities.
The architectural style of the property dwelling.
The condition and state of repair of the property.
Whether the property has renovation or development potential.
The highest and best use of the property.
The number of bedrooms and bathrooms.
The size of the kitchen and bathroom(s).
- How much does a valuation cost?
Commercial report costs are usually inconsequential in light of the usual outlay and in general are quoted on a job basis.
Valuation reports vary in price depending on subject property type and the report format required. The price for a standard three-page report for an average residential valuation costs as a little as a few hundred dollars and is an invaluable tool that provides sound piece of mind when it comes to buying, selling and assessing property.
- What qualifications and memberships should a professional valuer have?
Valuer qualification requirements can vary from state to state. A current non-student membership to the Australian Property Institute indicates a valuer has completed relevant tertiary studies in their field, has completed supervised experience in the field requirements, and is meeting continuing professional development (CPD) requirements. Certified Practising Valuer (CPV) status is another qualification to look out for. A CPV accreditation indicates all the above requirements are met.
- What information do you obtain within the valuation report itself?
Terms of reference.
Comparable sales evidence; an extract of the most comparable and fitting sales
General comments (if applicable)
Any value assessment that you, our client requests
- How do you, the client, benefit?
Once you have received the valuation, you are an informed person, when you speak to anyone relating to your property you will, at that given point of time, be fully aware of the market, its market force and your property’s value. If you are contemplating selling your property, you will be in control of the sale process, as well as the fact that you now have a legal document, and have received independent professional advice, with that entity having no vested interest. A valuation report is a professional and legal assessment of the value of your property.
It is common for the instructing party to ask the valuer this question as soon as the valuer has inspected your property.
The truth is at that time the valuer doesn’t know what the property is worth. The inspection is the first step of many that the valuer must go through before a value is determined.
- What does the valuer consider in determining the value of my property?
The valuer measures the land size and improvements from the outside of the external walls to determine square metre size of the improvements. The external measurement is standard throughout the industry. Usually no interior measurements are required. The valuer takes notes concerning the features of your home such as room layout, number of bedrooms, baths, etc. The valuer also makes a determination of the general condition, appeal and functional layout of your home. All of these items are taken into consideration in the valuation report. Additionally, the valuer has consideration to the marketability, local economy aspect, market dynamics and market segments.
- Does the valuer do a whole building inspection?
No. The valuer is not a whole house inspector. An Engineer, Architect, Electrician, Plumber, etc. are deemed to have expertise in their areas. The valuer walks through the house to get an idea of the general condition and accommodation. A valuation is not a guarantee of condition. You are encouraged to seek the advice of experts if you have any questions about the structural aspects.
- How long does a valuation take?
The physical inspection of a typical property takes between ten and fifteen minutes. Sometimes an inspection can take longer if the dwelling is difficult to measure or has some unique features that require additional investigation by the valuer.
After the initial on site inspection of your home, the valuer inspects comparable sales of similar type properties within the immediate vicinity. The purpose of this inspection is to search for properties in that area that are similar to the property being valued that have sold within the last three to six month period. When the field work is completed, the valuer completes the report and rationale and reports to you under the terms of reference of the Australian Property Institute.
- If the valuer is not from my area, how can they properly value my property?
Certainly a valuer should be familiar with specific areas or neighbourhood to value a property. The misconception is that only someone who lives ‘close by’ would know the area. At FVG Property, we value throughout Melbourne and our valuers have completed thousands of valuations. We have valued in all area of our service area.
- Is a valuation different from a council rates notice?
Yes. A rating valuation is prepared for the purpose of assessing rates and land tax of property. It does not usually involve an internal inspection and is prepared at a particular date. The relevant date of valuation on your rates notice can vary depending upon where you live. This valuation cycle can be 12 months and up to 4 years in some cities.
An independent valuation and real estate agent’s appraisal are documents that are created for different purposes. An agent uses his expert local market knowledge to arrive at a selling figure which the property should be placed on the market. A valuation is carried out by a qualified property valuer for a variety of clients including banks, solicitors and individual property owners for a wide range of purposes.
- I am buying a property, do I need a valuation?
A valuation before you buy a property can provide you with an independent opinion of its value. This can help you negotiate the right price and save you money. Valuers will check the property’s title and zoning as well as provide a risk analysis which highlights any potential opportunities or threats.
- I am selling my property, do I need a valuation?
Before you sell your property, a valuation can provide you with an independent assessment of current value before placing your property on the market. This figure may be different from what a real estate agent says your property is worth. The valuation report is a document that can be used as a negotiation instrument to ensure you do not a sell a property for less than it is actually worth. A valuer can also provide you with tips on how to add value to your property.Source: fvg.com.au