Property appraisals and valuations – so what’s the difference?
It’s not difficult to get these two mixed up when questioning yourself on the value of your property, whether it be just for interest’s sake, or there’s a more mandatory reason.
If you are in fact asking this question, an appraisal is what you really want. But let’s take a look at why you might need to understand and differentiate between the two terms.
So, when would you need an appraisal?
If you were contemplating selling your property, a property appraisal is what you would seek, especially if you wanted to research and compare local market properties and figures. An appraisal is just a fancy word for an estimate, that is generally related to the local market data and is property-specific.
These are done by a licensed real estate agent and will analyse recent local data and market activity to provide you with the most accurate estimate possible. Changes like renovations and enhancements to your property will be accounted for in the appraisal, which generally will have a positive effect on your overall estimate. New infrastructure or public development can also influence the true value of your property.
You can request an appraisal at any time for free at most local real estate agencies across Australia. A good tip is to ask a variety of agents for appraisals, as these are agent-specific estimates in which you could see very different opinions amongst.
So, when would you need a valuation?
A property valuation must be requested in instances where a more specific and accurate estimate needs to be obtained. In certain situations like a divorce settlement or a deceased estate, or even applying for a loan, a valuation is a more appropriate form of value estimate. In terms of simple explanation, a valuation is much more formal.
Someone who can formally evaluate property has the education, qualifications and certification to do so. A valuation process is usually significantly more complex than a simple appraisal that is done by a real estate agent as there are a number of contributing factors to consider that will influence the real value of the property. This includes attributes that surround the property such as the location, public amenities and infrastructure, the structural condition, presentation and any other renovations or additions to the property. Renovations can include garden or kitchen overhauls, to meek aspects like built-in wardrobes. Keep in mind that the valuation will consider any restrictions or building limitations as well.
Unlike a property appraisal, a valuation must be requested and organized well in advance and is almost never free. The most common price for a property valuation is approximately $500, but will always depend on the evaluator.
After everything property-related has been taken into account, a formal report will be drawn up and provide to you, outlining the details of the valuation. This will then be thoroughly explained to you by the evaluator, presenting exactly how they have calculated this figure. You’ll also have the chance to ask any questions at this final stage as well.
So, by now you should understand the difference between a property valuation and a property appraisal. It’s always a good idea to get an estimate done at least once a year, as you could discover that your home is worth much more than you originally expected!