A property valuation is a detailed report of a property’s market value. However, it’s not uncommon for homeowners to receive several different figures.

Undertaking a property valuation is usually a task required of property owners, real estate agents and investors. For a variety of reasons, the owners may want to know the real price of the property, settle family disputes, to know the insurance premium amount, to calculate house taxes and most importantly – to sell or purchase the property in question. The property valuation acts as a guide for both buyers, sellers, investors, and real estate agents. 

What we know as a property valuation is defined by the International Valuation Standards Council as the estimated sale price “between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion”. 

As the wording of that definition implies, the final sale price of a property is usually quite different from it’s valuation contained in the report. It can be almost impossible to predict how emotions, market knowledge and other driving factors may affect negotiations, which is usually why the dollar amount between a bank’s property valuation and a real estate agent’s property valuation varies – so why do these discrepancies even exist?

Banks and major lending providers tend to err on the side of caution when it comes to valuing a property. This boils down to the simple fact that they need to know that in the event that you default on your loan, they could potentially recover their money from the sale of said property. 

In comparison, real estate agents are usually the first port of call when it comes to assessing the market value of your property. This will often help a vendor decide who to engage to sell their home, so naturally it’s going to be higher than the figure issued by a bank. After all, it’s often a part of the agent’s “sale pitch” to you in an effort to get you signed up to sell with them. 

While this is all relevant to the bottom line of a property valuation, exactly what factors are taken into consideration when calculating the true value of a home or property?

How Property Valuation Is Calculated 

Regardless of whether the property is sold via private sale or auction, the price that the buyer is prepared to pay on the day the contract is signed, is the property’s legally binding sale price. Hot markets and high demand like what we are currently seeing in many parts of Australia can all have an effect on the final sale price for a property. However, property valuation still plays an important role when it comes to influencing the final sale price – so what does a valuer take into consideration?

• The size of the property
• The number and type of rooms
• The fixtures and fittings
• The structure and condition of the building
• The standard of the fit-out and the property’s architectural style
• Ease of access to the property
• Planning restrictions and local council zoning
• The property’s location and level of amenity
• The size of the land
• The aspect, topography and layout of the block

Before you get carried away with what you could potentially earn from the sale of a home, it’s important to ensure that it’s at it’s best for the property valuation that is sure to happen beforehand. While there are many things homeowners can do to sell their property faster, for the right price, improving the overall value of your home can be easier than most people think. 

Curbside Appeal – If your block and house looks neat and tidy from the street, it is likely to benefit the valuation. This is the first impression that potential buyers receive from your home, and the same goes for potential property valuers. 

Boost The Kitchen – Kitchens are the biggest drawcard for buyers. While the costs for a basic custom kitchen can start from as little as $10, 000 – if you aren’t willing to spend that much, consider updating your splashback, handles and even the colour of your cabinets. 

Flexible Space – In the era of working from home – and staying home – buyers need flexibility. This is especially relevant if your home is on the smaller side: are the room functions rigid, or are they flexible? An example of this is a home office that also doubles as a spare room. 

Should you be looking to sell your home, enlisting the services of a property advisor can often be a game changer for vendors. As an example, your advisor would likely research the property, local agents, check the zoning, evaluate market conditions, and communicate clearly with the owner regarding all of their options. When working with a reputable advisor, this often results in homeowners being able to sell their property for significantly more than they initially thought possible. 

Taking The Stress Out Of Selling Property

A completely free service, Emergency Services Property Advisors provide property advisor services to Police, Fire, Ambulance and S.E.S personnel and their families right across Victoria.

Luke and the team at ESPA are passionate about providing support to some of Australia’s most valued public servants, and aim to provide tangible real estate advice to those in stressful positions with crazy hours at no extra cost to them. Along with key industry insights, ESPA also works with a broad range of service providers linked to the real estate industry such as conveyancers, trades, legal practitioners and mortgage brokers.

If you are an emergency services worker looking to potentially buy or sell property in the future, please get in touch with Emergency Services Property Advisors today to discuss how we can turn your real estate dreams into reality, or call Luke directly on 0414 757 705.