Why get an evaluation of my property?

Normally, if you are going to sell your house sometime soon, you ought to get an evaluation of the property. Yes, no rule or law makes it compulsory for someone to get one’s property evaluated. You might have doubts about why you conduct a home valuation or land valuations, for that matter. Evaluation of property is the assessment of your property’s value, and by the property can mean buildings, land, etc. This task is not as easy as it sounds, and it takes more than you imagine to carry it out. Continue reading to understand its importance and clear your doubts:

When should you go for a property valuation?

It is not mandatory to get your property evaluated if there is no due diligence. It is more of a precautionary step taken to avoid complications regarding the property in the future. Clients usually request property valuation to solve income tax-related problems. You can put similar requests like renting, auctioning, availing home mortgages, and preparing will testament, acquiring authorities, etc.

How is property valuation helpful?

What is the approximate value of my house or land? Can a valuer value my property correctly? These are some common doubts people have regarding the valuation of the property. Property valuers can help you decide on these aspects.

A Melbourne property valuer is a trained and experienced professional in the valuation and surveying of property.  They are recognized by law and get licenses from the state body before they begin their duties. The valuer does a thorough inspection and finalizes your property’s value by comparing values with the current market.

You will then receive a sworn valuation report of your property’s value with validation. You can use this report as legal evidence in a court of law. Hence, if you are a seller, you can use the legal report as the property’s final pricing. The purchaser will have to trust you on the valuation and hence, create no path for bargains.

You can minimize your tax burden by requesting a valuer for a tax depreciation schedule. You can also request a property valuation and ask for advice from the valuer for improving aspects of your asset. This way, the valuer can help add value to your existing property.  Not only can the valuation help you in reducing payable and property taxes but also insurance of the property.

If you are a buyer, you can understand the risk profile of the concerned asset with valuations. It will allow you to make a secure and safe investment. If you’re a real estate investor, you need a property valuation to know how much rent to charge for it. One should note that the property market is a fluctuating business with respect to time. A real estate valuation report that was valid five months ago may give a different value now. Hence, it is important to maintain up to date valuations.

How much does a property valuation cost?

There is no fixed cost for the property valuations service. The valuers may charge you according to the property size, location, the type of certificate you need, etc. If concerned about the cost, they charge you only a small amount for the property valuation. Generally, services like valuations are tax-deductible.

We have briefly explained some questions related to property valuation. Now we shall discuss the reasons in detail why knowing the value of your house is important.

Why do you need to know the value of your property?

1.     Buying a property:

If you’re new to the environment of homeownership, you might be excited about the thought of getting your own house. You hope that the banks will accept your request for a loan based on the property’s full buying price. It doesn’t work this way. You will receive the loan amount based on the appraised value of the property you want to buy. 

 

The purchased value plays no part in this process. In case the appraised price is significantly lower than the purchased price, it will prove difficult for you.

 

They may reject your request for a loan that covers the total amount of the buying price.

 

Therefore, we recommend you to work with your dealer to request an independent third-party sworn valuer. Then, the valuer will perform a valuation on the property you wish to purchase. That way, you can buy the property at the right price and get the banks to approve your mortgage request. It also reduces disappointments, time, and any disputes.

 

2.     Property Sale:

It is discouraging to purchase a property that is higher than its assessed value. Likewise, it would be discouraging to sell a property at a price significantly lower than the value it is worth.

 

Hence, getting the help of a professional valuer is crucial to know the property’s actual value. The valuer will come up with a detailed market analysis to assess the asset’s most suitable price.

It is important to note that previous valuations of the property will not be eligible. Hence, you will have to produce a current valuation report.

 

3.     Organizing your assets:

Preparation and organizing your properties are essential if you want to hand them down to your close ones. It is generally associated with wills and deceased estate cases. An independent valuation on your property will allow you to make a fair judgment and distribute assets upon your demise.

 

4.     Retirement preparation:

As time flies so fast, before realizing, you will be on your pouch, sitting and collecting your pension. You will be about 75 or 85 years of age. You wouldn’t want financial problems relating to settlement to be a burden to you when you come of age.

 

During this time, you would want to downsize to something more accommodating and comfortable. A peaceful and serene old life is a wish for many. Hence, it is wise to know your property’s current value to make smart financial decisions. These decisions often relate to the purchase or sale of properties.

 

5.     Asset Tax Assessment Appeals :

The drawback of increasing the asset’s value is that the property tax must also increase accordingly. However, sometimes an unreasonable increase in tax charges may occur while jumping from a year to the next. In such cases, you can take the case to the municipal tax office and question the authorities in charge.

 

Hence, to have the upper hand in situations like this, you would require the assistance of an independent third-party valuer. Through whom, the authorities may hear your appeal and reduce your taxes.

 

6.     Renovations and upgrades:

Many carry the notion that spending on renovations and upgrades will ensure the sale of the property at a higher price. This understanding is often not the case. You must know the right places to renovate and upgrade to impact the final pricing significantly.

 

A property valuation is needed to know where you must carry out the renovations and upgrades. Therefore, to understand where your investments will make the most impact, a professional valuer’s guidance is crucial.

 

7.     Capital Gains:

Do you want to validate and be sure of the capital gains you are reporting on sold properties? That they indicate a fair market value? A property valuation will assess the asset’s actual value and make sure that you’re paying the right amount of taxes.

 

Most homeowners are unaware that they need to evaluate their houses before applying for insurance policies. They open their eyes when they realize that the insurers have underinsured their properties. Hence, they often find themselves in a mess. Therefore, it is crucial to request a property valuation before considering insurance covers.

 

It is also a good way to keep you financially secure if some theft or property damage happens. A formal valuation report can help you in your claims in case unwanted difficulties arise.

 

9.     Bankruptcy:

It is most likely that your house is the most valuable or important property that you own. What if there ever comes a time when you will have to file for bankruptcy? A property valuation by an expert valuer will ensure that you can sell your properties at the right price.

 

10.                        Litigation:

In unfortunate events such as divorce or death, the parties having shared ownership may require a property valuation. Property valuation may solve misunderstandings, disputes related to the fairness of property distribution, etc.

 

What are the approaches utilized in the independent valuation of property?

The following are the most common methods used to value a property:

1.     Sales Comparison Approach:

It is the most widely used asset valuation method. ‘Market rate approach’ or ‘comparable sales approach’ are some of its other terms. Utilizing this approach, you can perform residential and real estate valuations.

You can estimate valuation by analyzing the comparison between the real estate property and other comparables having similar sales value.

 

The use of this method is limited to only a certain type of property. It is because one must compare the concerned property with other properties similar to it.

 

2.     Cost approach:

In this approach, the investor should not buy an asset at a value higher than the cost required to build a replica. You can apply this method for constructed properties that one cannot sell. Here, you add the land value with the building costs of the property. Schools, churches, government buildings, etc. come under this approach.

 

You can use this method for income assets like commercial real estate, apartment buildings, etc. Here, you use the property’s total income and the return on investment on the asset for estimation. The impact of vacancies is taken into account, along with the property’s yearly gross earning.

It is essential to have a basic idea of property evaluation approaches to understand how your property is valued.