The basics of valuation
Any investor knows that the property market is volatile. People’s needs change, and so do neighbourhoods and economies. The driving factors behind market change are more than most can keep pace with. The value of your property can drop or increase incredibly rapidly in the grand scheme of things.
To make sound investments, you’ll need to take advantage of every tool at your disposal. A valuation from an independent valuer in Perth is a prime example. If you’ve ever purchased a home, you may think you know its value. Unfortunately, it’s not that simple.
An independent property valuation is:
- an effective way to measure current or past value
- the only way to ensure that value is determined objectively
- performed by experts with specialised training
- entering pre-purchase or pre-sale negotiations
- trying to determine an appropriate rental price
- navigating property-related legal settlements
- in charge of a self-managed superannuation fund
That’s only beginning to scratch the surface. If you have any responsibility over property, you’re going to need an independent valuation at some point or another.
You’ll want to understand as much as you can about the process, the kinds of properties that are valued and who performs the valuation.
What is an independent valuation?
A valuation’s goal is to calculate the value of a property. It’s a process that licensed valuers have honed over years of training and practical experience. It requires research, detailed market comparisons and an extensive grasp of the unique features of the local area.
A valuation involves:
- studying your local area to determine its current and future value
- using exhaustive market databases that only valuers can access
- making comparisons between your property and recent nearby sales
- examining the costs put into the property, as well as possible income generated
Most of these methods can be categorised under the direct comparison, summation and income capitalisation methods. Every step is a comprehensive process for which licensed valuers are uniquely suited. Different types of properties under different conditions will call for different combinations of these methods to ensure an accurate valuation.
The end form of any valuation service is a detailed report. This report is legally certified and describes the logic and calculations used throughout the process. Certain services come with the option of either a short or long-form report, while others have more specific requirements.
Your report will be admissible to the courts if needed. Few other similar services can offer this utility.
What are independent property valuers?
Independent valuers are property professionals trained to carry out property valuations. They are also referred to as Certified Licensing Valuers (CPVs). They undergo training and registration with the Australian Property Institute (API).
The API is a well-recognised organisation with a reputation for quality. They represent valuers of all manner of property, from commercial and residential to industrial and commercial.
Their standards for transparency and accuracy are widely acclaimed. In other words, expectations are high when it comes to the service of any valuer accredited by them. Luckily then, CPVs are always up to the challenge.
Most CPVs will have completed hundreds of accurate valuations by the time it’s their turn to help you. CPVs are distinct from bank valuers or real estate agents, who both conduct their own form of appraisals.
The key distinction is:
- banks perform valuations on behalf of a lender to validate loans
- real estate agents value a property based on what they believe it can sell for
Both have their place in the property ecosystem. However, the use cases of both bank and real estate agents are incredibly specific. Only an independent property valuation addresses every need of an investor.
How much does an independent property valuation cost?
The price of any valuation is based on the kind of service requested. The price of a residential valuation could differ significantly from that of a commercial valuation, for instance. The cost is tied directly to the overall complexity and scope of the report.
Most valuation services are highly customisable, so there is no staple price that can cover the breadth of these services.
Valuations are an incredibly in-depth affair and the prices are calculated to match. That said, any property owner or investor will tell you that regular property valuations can save you thousands in the long run.
Part of the cost is the expertise and training of the valuers themselves. As registered members of the API, their work is held to the highest standards. An excellent quality guarantee.
The property valuation process is a critical investment and ally for any property owner. It’s the only way to attain a completely impartial and legally certified statement of any property. That includes residential, commercial, retail, rural and industrial property.
Independent valuations are best performed by API-registered CPVs. Their extensive property market knowledge is an invaluable tool that can prepare you for buying and selling, as well as establishing a fair rental price or calculating your property taxes.
Their experience and ongoing training can keep you prepared for the ever-evolving property market in a way few services or professionals can.
Valuations involve a lot of market research, careful inspection of the property and cost and income analysis. This relies on specialised knowledge and premiere market databases that most of us would never benefit from without a CPV on our side.To find out more about how valuations work, or to receive a free quote, give us a call today and chat with one of our highly experienced valuers.