What goes into a property valuation report?
Property valuation services in Perth are in-depth reviews of real estate that deliver a property valuation report. This all-important document contains an unbiased and professional assessment of a property's worth. These can guide real estate transactions, mortgage lending, taxation, insurance, and investment decisions.
Several recurring elements are generally found in these reports.
First and foremost, the report details the property’s physical characteristics. These include location, size, and a legal description. These are used to compile information on similar properties and make market comparisons. Valuers compare properties based on age, condition, and features.
The document also details the purpose of the valuation. In other words, whether for selling, buying, refinancing, tax assessment or other purposes.
The physical inspection portion of the service also involves detailing any improvements or renovations made to the property. This includes evaluating the interior and exterior aspects that could influence the property's value.
Valuers also look at and describe the influence of contributing economic factors such as:
- local real estate market trends
- economic stability
- demand-supply dynamics.
Of course, the report will contain the final valuation figure, generally presented as a potential range. Comprehensive explanations of the analysis and calculations are included to support this.
In the interest of transparency, valuers must also list any assumptions, limitations and methodologies used throughout the process.
Can valuations help to boost property value?
These services can be used to improve the market value of real estate. In fact, this is one of the prime benefits of property valuation in general.
In essence, these investigations unearth a wealth of information that property owners and investors can use to make strategic investment decisions. For example, a higher valuation can attract buyers by showcasing the property's potential and attracting those in the market for properties in that price range.
More commonly, a valuation can identify valuable areas for improvement and repair. Certified Practising Valuers (CPVs) hold expert knowledge of the areas that most influence market value. This can be used to strategically invest in upgrades, renovations, and repairs with the best chance to boost that market value.
This could involve changes such as:
- remodelling the kitchen
- updating bedrooms and bathrooms
- enhancing kerb appeal.
Furthermore, valuations offer credibility to the seller's price expectations.
Potential buyers are generally more likely to respect the asking price of real estate that has been valued professionally. This can reduce friction throughout negotiations and lead to faster sales.
Investors arguably gain the most value from these services. By assessing the potential return on investment based on the property's current and projected value, they can determine whether the property aligns with their financial goals and make investment decisions accordingly.
How are property valuations priced?
Pricing a valuation is a complex process that accounts for many factors. No two valuations will be priced the same. The price is directly tied to the effort, time and expertise required to complete the service accurately and comprehensively.
Property type and location are important influencing factors here.
Whether the valuer is servicing residential, commercial, industrial, or rural property will alter their approach to the investigation. Furthermore, properties in prime locations or with unique features usually require more intricate analysis, which impacts the service's price.
The features and size of the property question play a role too. A property's size, layout, condition, and features directly affect its value. Larger properties or those with exceptional amenities demand more time and expertise to assess accurately.
Fluctuations also influence the complexity of the investigation in supply and demand and various other market conditions. As a result, these affect the price of the service as well.
The scope of the valuer’s methodology is important to consider. For instance, gathering and analysing comparable sales data requires effort and expertise. On that note, limited data availability may necessitate additional research efforts.
The other popular methods, known as the income approach and the cost approach, involve varying degrees of complexity that may affect pricing models.
Finally, the need to adhere to specific regulations and standards can impact the scope and complexity of the valuation process as well.
How often should property valuations be performed?
The recommended frequency of valuations is dependent on factors like:
- market volatility
- property type
- regulatory requirements.
For residential properties, valuations are usually required in a stable market every three to five years. This timeframe allows for potential changes in market conditions to be accounted for without overly burdening property owners with frequent valuations.
Additionally, this ensures that businesses and investors have accurate and up-to-date information.
There are, of course, instances that warrant more frequent valuations regardless of property type. If significant renovations or improvements are made, the property is involved in inheritance or divorce proceedings or when there's a need for refinancing, more regular valuations may be pertinent.
Fluctuations in the local real estate market also call for more frequent reporting.
The ultimate goal of any valuation is to provide an accurate representation of a property's worth at a given point in time. Valuations can aim to uncover either current or past market value, depending on the situation and the customer’s needs.
It is highly recommended that property owners regularly consult a professional valuer to strike a balance between staying informed about a property's value and avoiding unnecessary expenses tied to frequent assessments.