Most first time home buyers and people new to the real estate business deem that the process of property valuation and appraisal is the same. It is important to know that both have underlying differences. Knowing what differentiates both processes will help you in deciding which of the two processes is required to facilitate the home selling process.
Property Valuation
It is a “formal” process and the resultant figures are not a result of arbitrary reasoning. Valuation is done when the actual value of the property has to be determined. Most of the states in Australia only allow qualified professional valuers to execute this step. Valuation is an intricate process and it takes several factors into account. Some of these are mentioned below:
- The condition of the building and the structural integrity;
- The zoning and location of the property;
- Features of the building and the encumbrances.
When is a valuation required?
Because of the intricacies and formalities involved with the property valuation process, following are the situations when it may be required:
- When you want to form a basis for the settlement of property related issues in court;
- When you want to apply for mortgage loans or you are considering refinancing options; and
- When you want to determine the value of the property in case of a deceased estate owner in order to manage the asset distribution amongst the next of kin.
Property Appraisal
Property appraisals don’t give you information about the “exact” or “definitive” worth of the property. Think of appraisals as an opinion of a real estate agent who is knowledgeable about the locality and existing housing market. So, basically when you opt for an appraisal, you only get a rough estimation by a professional real estate agent. Unlike valuation, appraisals are not a formal assessment, which is why the appraisal quote cannot be considered an equivalent to the actual worth of the property. It is like a guideline that just sheds light on the possible price. So, how is the appraisal quote determined? Well, in order to come up with the rough figures, the agent analyses two main things:
- The previous and current sales data; and
- The house prices of similar properties in the vicinity
The deductions are a by-product of the agent’s own knowledge of the housing market and familiarity of the locality— a mere educated speculation.
When is an appraisal required?
Property appraisal is required in any of the following circumstances:
- When the transference of real estate property ownership is being done;
- When the ownership of multiple properties is being done after a merger; and
- When the seller needs to determine the acceptable price when the offer price is being made.
Despite the fact that appraisal do not reveal the actual value of a property, they provide the property seller with an abstract knowledge about the probable market value, which helps in determining the profit margin.
If you are looking to get the best possible appraisals for the suburbs in South Australia, you may contact a qualified valuer at My Property House.
View Details
