If you are buying a property or refinancing your existing loan, you and your lender will want to consider the property’s value. This article will enhance your understanding of property valuations.
The main ways to assess a property’s value include:
- Valuation
- Automated valuation method (avm)
- Desktop assessment.
Property valuation
A property valuation is undertaken by a qualified property valuer who visits the property and then prepares a report in which the market value of the property is stated by the valuer based on a variety of factors. These include the condition and size of the property, the location of the property and comparable sales evidence.
Automated valuation methods
An automated valuation method (avm) uses an automated process relying on statistical data about a property to estimate the property’s value.
Desktop assessment
A desktop assessment is a brief report prepared by a qualified property valuer who uses statistical data about the property to assess the value of the property without visiting the property.
Why does a lender get the property valued?
A lender will order a property valuation, avm or desktop assessment when a person wishes to buy a property or refinance an existing loan. The property value, avm or desktop assessment is used by a lender to see if whether the property provides sufficient security against the loan amount and also highlights any issues about the property that the lender and its lenders mortgage insurance (lmi) provider may wish to consider.
Property value and buying considerations
Inspection of the property
- Size and design n Condition
- Position (e.g. North facing is ideal for solar sunlight)
- Potential (for future renovation)
- Hazards (e.g. risk of flooding)
- Has the property been on the market for an above average time period & has there been any price reductions?
- Is the listing price reasonable and is there a chance to negotiate?
Location and comparable sale
- Where is the property located?
- Distance from the property to public transport, schools, recreation facilities and other key location items?
- What are the recent comparable sales near the property?
Property demand
- What way is the property market heading?
- Is there currently (or likely to be in the near future) an oversupply of similar properties in the area?
- Are there lots of other buyers in the market?
Source: It’s my home magazine
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