What is a Property Valuation

By Matthew Kenworthy | General Info

A property valuation report is a requirement for most lenders when approving a home loan. The report will include an estimate of the property’s value as well as extra information about the property.

Extra information in the report includes:

  • Land Size
  • Building Size
  • Condition of the Building
  • Potential Concerns or Risks with the Property
  • Nearby comparative Sales to the property

When Do You Need To Get A Property Valuation?

The most common time to get a property valuation is when a lender is financing a property. With most lenders it is an essential part of applying for a home loan.

If the bank requires a valuation report they will use a valuer from their own panel or preferred valuers. Depending on the lender and product you are applying for, the cost of the valuation may be on charged to you.

You don’t need to organise a valuation report yourself. Either the bank or broker will do so. The valuer will contact you to arrange a suitable time to enter the home if required. If you are purchasing a property the valuer will contact the selling real estate agent.

The bank requires the report to ensure the property meets their requirements. The valuation report helps ensure the property is a type they are willing to finance. The estimated value helps in ensuring they hold enough security. If the bank needs to recover the loan proceeds they need to be confident they can get their money from the sale.

In certain cases you may wish to order your own licenced property valuation report. This might be required for valuing assets for taxation purposes, or as part of a division of assets.

How Do They Work Out The Value?

When conducting a valuation valuers will generally visit the property and require access. They will make notes on the condition of the building and any visible structural issues. They will consider the number of rooms, layout as well as any other improvements.

There are some instances where a valuer will not require access. This includes when a lender only requests a desktop or kerbside valuation.

The valuer will also measure the size of the dwelling. If available building plans can assist the valuer in getting a more accurate measurement.

After visiting the property they will also review planning restrictions, zoning and it’s location.

Once all these factors have been established the valuer will be able to compare the factors to nearby. This allows them to come up with an estimated value relative to the current market.

Do You Agree With The Valuation?

Valuations carried out by a qualified valuer take a scientific approach to valuing property. They differ from an appraisal carried out by a real estate agent who may consider other factors.

If you don’t believe the valuation report is correct you can challenge the report. You’ll need to have comparable sales in the area that the valuer hasn’t considered. It may also be possible to have it valued by a different lenders valuer who may value your property at what it is worth.

If you have had a loan application declined due to a property valuation we may be able to assist. Please get in contact with us about our obligation free mortgage broker service to see if we can help.

About the Author

Matthew Kenworthy is a specialist in all aspects of Residential & Commercial Finance. He can assist all borrowers from First Home Buyers to Property Investors with Large Portfolios.