Total Home Inspections News

2 September 2021

Perth property valuations: 5 things that you need to know

2021 has seen quite an increase in property values across Perth’s greater region and as we come into the spring home buying/selling season many potential home buyers and investors alike will be seeking property valuations to help them make some big decisions. There is no doubt that valuations are an essential part of property investment because the numbers need to stack up before investors will dive in. Additionally, when trying to obtain finance from the banks as an owner-occupier, their bank appointed valuation can oftentimes make or break the deal.

With this in mind, here are five things to consider about the process of property valuation.

It’s an estimate, not an exact science

Property valuers, like us, are only human. So, their determination of what the fair market value of a property will be, is somewhat subjective in nature.

There’s also the potential for the valuer finding themselves legally liable if they somehow place too much value on the property, and the bank in-turn loses money on the loan. Many people within the property industry believe that this fear can cause the valuer to be more conservative with their estimates.

There’s a big difference from a real estate appraisal

Unsurprisingly, Real estate agents have been known to “inflate” the figures when it comes to appraising property. This is a commonly used tactic because they want to secure the listing to sell your property, and with all the stiff competition from other Agents out there, promising to be able to sell your property for more is how they can lock in deals.

Agents understand that homeowners and property investors alike, want to achieve the best price for their property, so although most agents are very professional, they can alter their estimates upwards to meet your expectations. This contrasts with independent valuations, performed by valuers without any vested interests. They’re tasked with only one duty – valuing the property in question. And most importantly, the final assessed value of the property makes no difference as to how much they get paid.

Valuation aren’t created equal

It is often assumed that there is a standard process undertaken by all property valuers, however, this is not the case at all. You need to be aware of how the valuation is carried out and how it can directly influence the final outcome.

There are two main types of valuations: Full valuations and Restricted Valuations. Full valuations are the most comprehensive of the two and involve a total internal and external inspection of the premises, as well as researching the comparable sales in the area and the overall local property market. Restricted valuations, otherwise known as “kerbside” or “drive by” valuations, only use an external inspection of the property as well as the comparable sales in the area.

You can see why this could be problematic if the valuer has never set foot inside the property before making their assessment.

Comparable sales are a significant factor

The most practical form of data a valuer will use to determine their estimate for your property is the comparable sales in the area. Comparable sales data is gathered from recent sales of homes close to your property that are similar in size and structure.

Comparable sales can sometimes be difficult to obtain in more remote areas or for buildings with unique features and styling, which can make it trickier for valuers to come up with accurate figures. This means the less comparable homes there are in your area, the increased likelihood the valuer will rely on their own subjective estimate of what your property might be worth.

You can be a part of the process

You can request to be present throughout the valuation process to answer any questions the valuer might have. While you don’t want to appear to be trying to influence the independent process, it doesn’t hurt to provide valuers with any extra information that might be pertinent to their judgment, such as improvements undertaken since purchase or even a complete building and pest inspection report by the team at Total Home Inspections.