Valuation

A property valuation is a detailed report of a property’s market value. This is defined by the International Valuation Standards Council as the estimated sale price “between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”.
When would I need a property valuation?
A property valuation offers benefits to both buyer and seller. In providing a clear indication of a property’s market value, it reduces a buyer’s risk of paying over the odds for a property; in offering a detailed analysis of a property’s weaknesses, it can help a seller decide which renovations to make to enhance a property’s value.
That said, the most common reason why people need a property valuation is because their mortgage lender (usually a bank) requests one.
The bank needs to be confident that it can recover any outstanding amount owned on the property, should the buyer default on their mortgage.
Property valuations are also often required for financial reporting, for taxation compliance, for family law mediation and for determining the amount of compensation given to land owners for easements or land acquisition.
How is a property valuation calculated?
A direct comparison with recent comparable sales forms the backbone of most residential property valuations, though valuators will also take into account the following attributes:
• the size of the property
• the number and type of rooms
• the fixtures and fittings
• the structure and condition of the building
• the standard of the fit-out and the property’s architectural style
• ease of access to the property
• planning restrictions and local council zoning
• the property’s location and level of amenity
• the size of the land
• the aspect, topography and layout of the block
The sales are analysed in terms of land attributes, improvements, location and planning controls [and are then] compared to the property being valued.
However, other property types can require different approaches. For example, commercial property requires more financial analysis and development sites can require more planning consultancy.
Valuators will also visit the property in question, so that they can assess the condition of the building and make a note of any structural faults and nuances that might affect its market value.