We get asked on numerous occasions whether there is a difference between a valuation and an appraisal for property related purposes. The answer is yes! Although they both can determine the market value of a property, the process in which the value is calculated is done differently and the reason for the purpose is dependent on your requirements.
Knowing when a formal valuation is required as opposed to obtaining an appraisal is important. Its best to have a clear understanding of both and which would benefit when it comes to your property related purpose.
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Property Valuation
A valuation is a formal report that is conducted by an accredited experienced senior valuer that specialises in all property related services. A property valuation ensures that you receive a comprehensive detailed report of the property in question. Keeping note that a formal property valuation is a legal binding document. The way the valuers conduct these valuations require the knowledge and expertise to ensure you receive a service you deserve.
Here is what is taken into account when the valuer will complete a detailed report that will analyse the property to determine the fair current market value:
- Information of the property, including property type, use, size, and location
- Details of the property, such as its overall condition, materials used in construction, and fixtures and finishes
- Local market evidence from comparable properties, as well as the details of the properties a
assessment of the current market conditions
With an independent valuer, you will receive an accurate picture of your estates financial potential to steer you in the right direction whether you’re wanting to sell or buy a property. Whether an investor or an owner, a property valuation tailored to you will give you the peace of mind you deserve. Keep in mind a valuation can be used for many purposes not just for selling or buying.
For instance:
- Refinance your mortgage
- Renovating your property for (assurance for an increase in value)
- Family law & litigation
- Stamp duty ATO Taxation
- Related part transfer
- Retrospective (back-dated) Valuation
- Compensation
Depending on your purpose, the right team and valuation company will have a service best suited to your property needs, ensuring you get the best outcome you deserve at the highest of standards.
Property Appraisal
An informal valuation, which is usually completed by a real estate agent. An appraisal is giving a forward-thinking approach to how they predict the property market is headed and how you can benefit in the near future. Compared to the formal valuation an appraisal is not a legally binding document, an appraisal is usually the first step someone will take to align their expectations of the value and to put their property on the market.
In other words, an appraisal can be used as a guide to give you an idea or insight into what value you can expect if you put your property on the market. Having an appraisal completed by various real estate agents will give you a clear idea of what your property may be worth, and this will give you an overall idea on what decision to make based on your property and the realistic view you see fit.
Unlike Valuations, an appraisal usually doesn’t have a fee involved, to avoid any surprises do you research and check with the real estate agent to see if they will charge you. Its important that you find a local real estate agent who has the knowledge of the area and recent sales within the market so you don’t end up with an unrealistic value.
With a property valuation, the valuer will not take into account the stylish features and street appeal of the property unlike most appraisals completed by a real estate agent. A property valuation doesn’t dictate the amount the property will sell for, this will depend on the interest, emotions and competition in the area (or lack thereof), and this will result in the home selling significantly above or below their market value.
A formal valuation is required when a definitive value is needed whether this is for mortgage purposes, property settlement or legal obligations and is conducted by certified highly trained valuers and is legally binding. Whereas an appraisal is only intended as a guide to pricing if you wish to place your property on the market and would like to know where you stand and can be requested by a real estate agent and can not be used for a legal purpose.
Ultimately the property market can be unpredictable at best, depending on your requirements either an appraisal or valuation is best suited to you. By seeking out professional advice from a certified senior valuer, they will help you determine what service of valuation you require to meet your property value expectations.
Author bio
Timothy Evans – LinkedIn Profile
Timothy Evans has over 20 years’ experience in residential, commercial, and industrial valuations across the Brisbane metropolitan area. His expertise in property has led him to become an authority in his field and has become an expert in larger scale commercial property and development site valuations. In addition to being one of Brisbane Property Valuer’s leading Senior Valuers, Timothy often features as a guest lecturer and keynote speaker at conferences.