Has your property dramatically risen since its pre-boom purchase or could its value have slipped since the market’s peak? And for those intending to buy property now, how do you know that you’re not paying too much?
Most investors seek answers to these questions by contacting their local real estate agent. Ultimately, a property is worth what the market is willing to pay and real estate agents in the area have intimate knowledge of the ups and downs, the pros and cons and the expectations of buyers.
It’s also common for people to request a valuation if they are planning to sell or just to satisfy curiosity.This is mean you need the services of a valuer.
Valuers are a recognised authority on what a property is worth. They usually require a university degree, have professional standards to meet and are required to have continual professional stgelopment. Industry regulations vary around the country, with some states requiring valuers to be registered.
Banks usually require a property valuation before approving a mortgage loan. Most institutions have a relationship with a valuing company and organise it on behalf of the borrower.
But there are other reasons you might seek a valuation.
In the case of divorce or defacto breakups where assets are being divided both parties are required to get a valuation or can agree on a single valuation. A valuation should always be sought in the case of deceased estates.
Sometimes the Australian Taxation Office or the courts require property valuations to determine the true value of someone’s assets or help settle disputes between families or business associates.
Resumptions are another cause for valuations. In areas where there is a lot of infrastructure works and properties are being resumed to make way for roads, bridges and tunnels. Finally, rezoning is also reason for valuation – people want to know whether the changed zone will increase or decrease the value of their property.
But valuations are not just for residential properties. They can be integral to those in business, used to determine the rent values in retail or commercial premises or the feasibility of a residential or industrial sub division.
The cost of a valuation varies substantially. When it’s organised through the bank it can be as little as $140 but for private valuations the average is around $500 and up to $2000 for more prestigious properties.
So what factors influence the value of a property?
We all know the importance of location, location, location. But where water and views might once have ensured prime values, economics is now impacting on location.
Properties near public transport are increasingly in demand. Being on a hill where you can catch breezes and have views is better than a hollow and ancillary features like carports, swimming pools and the number and size of bedrooms affect a valuation. Aspect is also important – having the back face north – and it is better to be slightly above the road than slightly below it.
When investing in property, many people ignore the important things that impact its value such as poor construction. They need to look at a house and determine whether they will be happy living in it; if not, the tenants probably won’t be happy either.