Qu 6 What will the valuation report include?
Q: What is the difference between a Real estate Agents’ property appraisal and a professional valuation?
A: A valuer is bound by the Valuers Act 2003 to be certified and have tertiary qualifications prior to valuing property. Every valuation figure must be based on a predetermined set of factors and comply with an industry standard. A valuer’s figure may be used in court and only a valuers valuation is accepted by banks for Mortgage purposes.
A real estate agent can only provide a general market appraisal and are only expected to be registered as a sales person after a two week registration course in order to be able to write this appraisal. Furthermore, a Real Estate Agent may have vested interests and therefore are not an independent unbiased adjudicator.
Q2. Why do I need a professional valuation?
A: Professional valuations are often legal requirements for example when applying for a loan from a financial institution, calculating land tax or when resolving a family/inheritance dispute.
However, valuations are also beneficial for purposes such as determining the real value of a property for sale in the open market. This imparts you with knowledge that enables you to weigh up positives and negatives of various prospective properties and protects you from paying too much for any property.
A professional valuation may also be advantageous in portfolio formation and resource allocation. Regular valuation of property indicates the main growth areas and alerts you of potential ‘cash cows’ as well as ‘dog’ investments.
If you are considering renovating, rebuilding or adding anything to a property, an ‘as if complete’ valuation will indicate how much the property will be worth upon completion. This enables you to calculate your Return On Investment and Cost Benefit Ratio.
Q3. How much will a valuation cost?
A: The fee charged for a valuation is based on the estimated value of the
property. The majority of the high end residential properties attract a fee of under 0.1% of the value of a property, for a short form valuation.
Long Form valuations are calculated at a higher rate but still reflect a competitive rate, where the benefits outweigh the costs.
Q4. How long does the valuation take?
A: A residential short form report is generally completed within 48 hours of inspection. The inspection itself only lasts ten to fifteen minutes, depending on the size of the house and attached property.
Long form reports, due to their detailed nature, may take up to 5 working days.
Q5 How long is the valuation valid for?
A: Due to the constantly changing nature of the property market, the valuation report can be relied upon only for three months after the inspection date.
However, once a valuation is undertaken, and the three month period has elapsed, a ‘letter of comfort’ or ‘market change opinion’ may be commissioned to state whether any dramatic changes have taken place in the market and how this might affect the valuation figure.
Q6 What will the valuation report include?
A: The report will summarise the property details such as the address, title details, zoning, council details, current use and will provide a brief description of premises. It will further address the property characteristics such as the zoning effects, location, neighbourhood, site description and access, as well as services that are available to the site. The building construction, accommodation and quality as well as condition will be further evaluated, with additional consideration given to ancillary improvements. A risk analysis will be conducted on all of the forementioned factors.
Finally, relevant and recent sales evidence will be compared to the property in question, and a value for the property will be disclosed.
The report will be presented with photographs taken at the inspection, title search documentation, and a locality map.