If you own property or are looking to own property, you’ve probably looked into getting a valuation service. Knowing a property’s worth is beneficial in many ways and takes away the need for debate when negotiating a sale or purchase.
The way property valuations work depends on what type of valuation service you have purchased. Property valuations in Western Australia cover a wide range and can be used for residential, commercial, industrial, and rural properties.
There are also a number of reasons people request property valuations. An independent valuation service can be for taxation purposes, insurance purposes, private transactions, litigation, pre-purchase/pre-sale advice, and more.
Reports are written according to a strict set of regulatory and legislative requirements. As we only want the best when getting a valuation report, valuers receive extensive education and training.
With custom-made reports that are recognised in the eyes of the law, the benefits of independent valuations are wide-ranging.
These precise services are performed by qualified experts who understand what makes a property valuable.
What is a property valuer?
A property valuer is a highly qualified professional who has undergone the necessary training and education needed to prepare accurate valuation reports.
Valuers are registered with the Australian Property Institute (API) and follow internationally-recognised valuation standards. These experts hold specialised knowledge and follow strict legislative and regulatory guidelines while preparing reports.
As experts in real estate, valuers are led by industry benchmarks and best business practices to maintain a consistent standard of quality. Each report is tailor-made to suit the client’s exact needs and serves as an official document in the eyes of the law.
Property valuers are always staying up to date with the existing market conditions and are careful to consider every relevant internal and external factor when performing the assessment. With no outside influence or inherent bias affecting the final outcome, property valuers can prepare detailed and precise reports.
Property valuation process steps
The steps a valuer takes will depend on the type of property and the purpose of the report. As each valuation is customised to suit the circumstances of the client, the steps might not always be the same. The most commonly available valuation services are:
Residential Valuation
A residential valuation is the most commonly requested property valuation service. Most of the time it will involve a property inspection, an analysis of comparable sales, and the existing market conditions.
When inspecting the property, there a few different things that might affect the final monetary value. Some key factors include:
- Size of the property
- Condition of the building
- Street appeal
- Location
- Suburb reputation
- Renovations and renovation potential
- Nearby facilities
- Amenities and features
Commercial Property Valuation
A commercial property valuation is more complex than a residential property valuation, as it involves more considerations when performing the calculation.
First and foremost, a qualified valuer will need to look at the income and expenses of the business. Valuers use an Income Capitalisation Approach when examining commercial properties.
This involves an assessment of the annual income and expenses, under the assumption that it stays the same year after year. The formula valuers follow when assessing commercial properties is as follows:
Net Operating Income / Capitalisation Rate = Value
Industrial Property Valuations
Industrial Property Valuations require a comprehensive analysis of all the influencing variables. They require property experts who are well-versed in analysing industrial properties.
Such properties include warehouses, workshops, factories, storage units, breweries, industrial land, and manufacturing land.
Some key factors that influence industrial properties include:
- current state of the area
- plans for the surrounding area
- accessibility for staff and distribution if applicable
- planned upgrades to surrounding infrastructure
- the security of the area
Rural Land Valuation
When determining the value of rural land, valuers assess the unimproved land. It considers surrounding infrastructure as well the value of similar rural sales and their respective potential.
It is the amount for which rural land could be expected to sell, without physical improvements such as houses, fences, clearing, levelling and earthworks. Valuation companies will assign a localised expert with experience assessing the value of rural land.
How do I get a property valuation?
If you’re in the process of deciding on an independent valuation firm to use, there are a few factors to consider to make sure you’re working with a reliable and qualified organisation.
- Firstly, look at the firm’s experience and expertise in valuing the specific type of property, equipment, or machinery you need to be appraised. A company with vast experience in your industry or with specialised knowledge about your property or asset will be the most beneficial.
- Next, review the firm’s credentials. Make sure that the professional valuers working at the company are registered with the relevant boards and hold the necessary certifications. Remember, whoever performs your valuation should be registered with the Australian Property Institute (API).
- Additionally, consider the location of the firm. Localised experts with a deep knowledge of the local market will have access to more comparable sales data and hold a more intricate understanding of the area.
- Think about the cost and whether it is affordable in your circumstances. Value for money is most important, and an official independent valuation can often lead to saving money in the long term.
- Finally, check reviews and request references and case studies where possible. Analysing the company’s past performances can give you a good idea of what you’re getting into.
Summary
A property valuation is the process of assigning a monetary value to a subject property. Qualified, registered, and experienced valuers use trustworthy methods to calculate precise figures.
Valuation services exist for all types of properties. As such, the steps a valuer takes when assessing its worth will depend on the property they are reviewing. Only uniquely qualified property experts can accurately prepare valuation reports in line with the relevant regulatory standards. As such, valuers must be registered with the Australian Property Institute (API).
There are many benefits to getting a property valuation provided it comes from a trustworthy and competent firm. When deciding on a valuation firm to reach out to, be sure to consider all of the relevant factors.
For more information on property valuation services in Western Australia, speak to one of our qualified experts today.