It is important to understand the value of your home in order to get the best out of one your largest financial investments. This gives you an accurate picture of your equity over time and helps you avoid overcapitalizing if you plan to renovate.
To have an accurate estimate of your home’s value, it is advisable to get a professional property valuation. The whole process – including home inspection and release of the valuation report – can take one to a few days but having your property ready can make the experience simpler and more pleasant for both you and the valuer.
What is a Home Valuation?
A valuation is a formal appraisal of the current value of your house. This is often the first thing you do when you sell your house.
A certified practising valuer (CPV) conducts the inspection and evaluates the property’s value based on a range of factors, including the condition of the house, its geographical location, and any improvements undertaken. They then prepare a formal valuation report containing a detailed description of your home, market and sales data of similar properties, how the property’s value was calculated, and other relevant information.
It is important to understand that a home appraisal is not the same as a property valuation. This is usually done by a real agent who gives a price estimate using local market information and recent sales. An appraisal is not binding and can’t be used for refinancing or loan applications, as it does not contain a valuation report.
How does a property appraisal work?
Two ways are most common for home-valuers to conduct valuations:
1. Comparison method
This approach is more commonly used by valuers. It involves comparing the property’s current value to similar properties in your neighborhood. Based on material differences between properties, the valuer makes adjustments.
2. Summation method
The value of land is calculated using many factors such as its shape, size, topography, surroundings infrastructure and amendments. It is also important to consider the costs of improvements made on the land, such as architectural features and the number of rooms.
A home valuation can only be conducted by a professional valuer if they have written instructions. The request should specify the purpose of the valuation and the valuer’s terms and conditions.
The valuation begins with an inspection of the property from both the inside and outside. This can take anywhere from 30 minutes to several hours, depending on how large the property is. The report should take between 24 and 48 hours to complete. A property valuation costs between $200 and $600 depending on the type and report required.
Ten ways to prepare your home for its valuation
Although property valuations are usually straightforward, it is worth taking the time to plan and prepare. These are some practical tips to make the process easier and more enjoyable for both you and your valuer.
1. Your valuer deserves respect
Common courtesy goes a long way in earning someone’s respect. Valuers have a full-time job, which may involve them doing multiple valuations during the day. A positive impression can be made by being punctual, smiling, offering a drink, and greeting them with a smile.
2. Do your research
To come up with a realistic estimate of your home’s value, you can do your own research on comparable homes in your area. This will give an indication of the actual value of properties. Valuers are more likely to accept your estimate if you have data backing it up.
3. Keep the most important documents handy
The valuer may require the following documents. These documents will help facilitate the process.
- Sale contract
- Plan for subdivision
- Certificate of title
- Liste of improvements
- Building plans
- Council rates notice
- Owner’s estimate of market value
- Sales of local paper and newspapers result
- An appraisal of the market for a local agent in real estate
4. You must keep your home spotless
A well-maintained home will make a significant difference in property valuations. A few simple tasks such as mopping and vacuuming floors, mowing lawns, pressure washing the front steps, cleaning out the dishwasher, and clearing out clutter can help to portray your house in an attractive light.
5. Let in as much light possible
Natural light can have a positive effect on your home’s perceived value, so let in as much as possible. Other lighting options can be used to make your home appear brighter if natural light is not available. For example, a fireplace in winter can give your house a warm glow that makes it feel more welcoming.
6. Space is essential
It is important to present your home in a way that promotes flow and shows how large it is. You must ensure that furniture doesn’t block or restrict access to rooms. This will be important for the valuer to verify. The valuer can measure the property easily if there is enough space.
7. Remodel your bathroom and kitchen.
If you plan on doing renovations to increase your home’s value, focus on your kitchen and bathroom. These are the most important areas to improve your home’s value because they are highly-used and frequented.
Be careful to not do too many renovations. Some of the less expensive ways to enhance your kitchen’s style include replacing cabinet handles and hardware, updating the splashback, and installing new taps. Small bathroom updates like painting walls, replacing tile grout, and reglazing bathtubs and sinks, meanwhile, can work wonders in enhancing your property’s perceived value.
8. No matter how small, fix all defects
If there are unfinished or neglected repairs – such as leaking roof, holes in the wall, squeaking doors, and stained paintwork – these can negatively affect how a valuer sees your home. To present your home in a positive light, make sure you do basic repairs and maintenance before the valuation.
9. Tell the valuer about any hidden features
It may be good idea to compile a list of your home’s features, especially the ones that are not obvious. It will help ensure that nothing is missed by the valuer. For reference, you can give the valuer a copy. You may not be able to see new air conditioning, insulation or solar panels. It is also possible to include information about recent renovations, including their cost.
10. Take care of your pets
It is not a good idea to leave your pets outside or inside during a home valuation. They could also hinder the inspection. You can have a friend or a pet service take care of them.