There are thousands of articles available on the internet talking about the importance of property evaluation for sellers and buyers alike. Yet there linger many doubts in the minds of new investors. Should you choose an experienced property valuer? Would it be worth your money? What if the valuer fixes a lower value for your property?
Such Questions arise because there are many myths and misconceptions about property valuation. These myths discourage people from opting for real estate appraisals. Which, in turn, stops them from reaping the benefits a property valuation entails.
In this article we’ve busted the common myths surrounding property valuation, to put your mind at ease once and forever.
Myth 1. Property valuation is not worth the price.
It’s commonly believed that property evaluation is nothing but a waste of money. This misconception arises from the lack of information about the dynamics of valuation. Property valuation is not blandly determining the market value of your house or a commercial building. It often leads to the discovery and rectification of flaws in your property. Such flaws, if left unattended to, would result in a drastic deprecation in the value of your property.
Won’t you like the best price for your property?
Therefore, contrary to the myth, the price you’d be paying for the valuation of your property using a service like Valuations VIC accredited property valuers would be much lower than the possible losses you might suffer from not choosing it.
Myth 2. The Valuers do not access the property impartially.
Are you also worried that your valuer would not assess your property in a non-biased manner? If yes, then it might interest you to know that the valuation arrived at can be challenged in legal court. In such a situation, the valuer would be answerable for the determined value. What this means is that the valuer would have to justify the price he arrived at by presenting the data and analysis behind the figure he quoted.
It ensures that your interest is protected. No valuer would like to risk their license by being dishonest in their job or scamming you.
Myth 3. The value determined by the valuer is final.
To understand why this is a misconception, you need to know the meaning of the value of a property. The value of a property does not mean the price said piece of property would fetch in a competitive market. It has more to do with the worth of a property which is calculated by assessing factors like the future profits, the utility of the property, how easily it can be transferred from one person to another, etc.
There is a scope of negotiation regarding the selling price of a property. It is possible to go lower or higher than the price fixed by the valuer. The only thing that matters is that both the seller and the buyer reach an agreement.
If you’re still not satisfied, you can change the valuer, or make some changes to the property (like getting it renovated and cleaned before appraisal).
Myth 4. Property valuation is arbitrary.
While it is true that property valuation is not an actual science, it is not at all arbitrary. The valuation process is subjective. There is no single formula that works for every property.
You might ask how many variables are involved in a typical process of valuation? The answer is a lot. Things like the location, street view, availability of open space, etc. are considered in determining the value of a property.
There are several methods that valuers use to arrive at the value of the property. Different types of properties call for a different approach.
The most common methods of property valuation are:
- Sales Comparison: In this method, the information on recent sale/purchase of properties similar in size, amenities, and located nearby (preferably the same neighborhood) is compared.
- Cost method: In this method, the market value of a property is calculated by adding the land cost and the cost of construction of the building. The depreciation (if any) is then deducted, from the total cost.
Hence don’t worry too much. Property valuation is going to save you a lot of trouble later on. Decide on a good valuer and get your property’s worth.October 9, 2020