What kinds of property valuation services are there?
If you are or are planning to become a property owner of any kind, you will eventually need a real estate valuation service. These are pivotal to the Australian property landscape. They help to shape crucial decisions for buyers, sellers, investors and legal entities alike. A comprehensive understanding of the diverse types of property valuation services is essential for navigating the complex landscape of property transactions and legal matters.
Among the most common valuation services are pre-purchase and pre-sale valuations. These aim to provide potential buyers and sellers with an objective assessment of a property's worth. In other words, they provide a basis to establish a fair sale price.
This knowledge empowers individuals to negotiate equitable prices and make informed investment choices. Similarly, rental valuation services aid landlords and tenants in establishing fair rental rates, fostering harmonious landlord-tenant relationships.
Valuations services are not limited to transactional contexts, however.
For instance, they extend into legal and financial domains. Tax valuations, for example, assist governments and taxpayers alike in determining property tax assessments. This helps to strike a balance between fiscal requirements and property owner equity.
Family law court valuations are crucial to equitable divorce proceedings. They ensure that any relevant assets are fairly divided between the parties involved.
Different services have different methodologies, applications and implications for stakeholders.
How property type affects a valuation
Valuation services exist to cater for every kind of real estate. We generally distinguish between:
- residential
- commercial
- industrial.
Each has distinct factors impacting their value that valuers are trained to look for.
Residential properties include the likes of single-family homes, condos and apartments. Popular services here are pre-purchase/pre-sale valuations, capital gains tax valuations and more. These properties are generally valued by location, size, condition, amenities and recent comparable sales.
Valuers also look for proximity to schools, parks, shopping centres and transportation.
When we speak of commercial properties, we refer to office buildings, retail spaces and hotels. Generally speaking, they are properties from which businesses operate.
Location still plays a role here, but the income potential is even more important. Valuers look at factors like occupancy rates, lease terms, tenant quality and market demand.
The property's adaptability to various businesses and its visibility also impact its valuation.
Industrial real estate includes warehouses, distribution centres and manufacturing facilities. They are valued based on functionality, location and condition. Nearby transportation routes and labour markets also influence their value.
Unique features like ceiling height, loading docks and specialised equipment are also key here.
Methodologies used across each kind of property include the comparable sales approach, income capitalisation approach and cost approach.
Desktop vs kerbside valuations
When seeking out a valuation, one of the most important choices is between desktop and kerbside valuations. Desktop valuations involve assessing a property's worth using existing data, such as recent sales, comparable properties and market trends, all without physically inspecting the property. This method is efficient, cost-effective and suitable for preliminary estimations.
The key advantage of these services is saving time and money.
Kerbside valuations involve a rigorous physical inspection. They include detailed notes on the building’s condition, surroundings and other value-influencing physical factors.
This hands-on approach is far more comprehensive. It includes factors that may not be evident from pure data analysis. They are generally used to deliver more precise assessments required for mortgage lending, property tax calculations or various legal proceedings.
These services, while effective, can be time-consuming and less feasible for large-scale valuations.
Ultimately, both services have their merits and downsides. It is down to the client to decide which service suits their needs. A real estate valuer is able to provide you with all the context you need to understand which form of valuation is most appropriate.
Property valuations for tax purposes
Valuations are an effective means for property owners to calculate their tax liabilities. Property taxes are based on the real estate’s market value, which valuations aim to ascertain. In turn, valuations can be used for capital gains tax (CGT), stamp duty and land tax.
Taxpayers rely on accurate property valuations to ensure fairness and equity in the taxation system. Capital gains tax, for instance, is based on the difference between the sale price and the property's market value at the time of acquisition.
API-certified valuers can be relied on to accurately calculate a property owner’s capital gains tax liability with a retrospective valuation service.
Stamp duty is a tax levied on the purchase of real estate. This is calculated based on the property's market value.
Similarly, land tax, which is imposed annually on the value of land, is determined by property valuations.
Valuers establish tax liability based on factors like location, size, condition and comparable sales. These services are conducted according to the rigorous regulations and standards of accredited industry professionals.
To learn more about the types of valuations available to you, contact one of our many valuation experts today.