Property valuation is vital for both buyer and seller. An accurate valuation allows the buyer to know if it’s a good investment. For the seller, it points out the areas that need to improve to increase the sale price.
Mortgage lenders (e.g. banks) also request this process for approval of loans. Max Funding real property investment specialist explains, “Lending institutions perform property valuation to determine if the property value is sufficient collateral for the loan. This process takes time because multiple factors are involved.”
If you want to sell the property or apply for a loan, it’s advised to hire a professional property valuer. But for the meantime, you can get a hint of its worth by doing these:
Research the Locality
Research is critical when in the valuation process.
Start in the immediate area around your property and take note of the following:
- Proximity to schools, grocery stores, hospitals, and other essential services
- Is it near a bus station or the airport?
- Is it located in a busy street?
- Does it have frequent criminal activities?
Lack of security and noise levels can decrease the market value, even if the property has a strategic location.
Inspect the Structure
Inspect every corner of the property instead of looking at it as a whole.
If possible, get the accurate dimensions of each room and write down the materials used it make it, e.g. concrete, oak, and marble. Then, try to answer the following:
- How much square metres are usable?
- Is the property on a flat surface or sloping block?
- Are construction materials durable?
- Are there any signs of damage? E.g. cracks and mould & mildew growth
- What are the functional amenities? E.g. pool, bar, spa, and tennis court
- Is the property relatively underdressed in this neighbourhood?
Some owners overcapitalise by adding amenities and facilities to their property, not knowing these do not have significant returns. These additions may even cost them more in terms of maintenance.
If you plan to sell the dwelling, make sure it has the seven things property buyers look for.
Compare to Similar Transactions
To get a good idea of the possible sale price, check out sold properties in the area. Compare only to nearly properties that share the size, amenities, and features of your own. Narrow it down to 3 and get their median price.
Take note that this is only a guide. Listing prices are often far from the actual property value.
Set Realistic Goals
Put yourself in the shoes of a potential buyer and ask how much you’d be happy to pay for this property? You may also request a trusted colleague to give you an honest opinion.
Make sure not to consider “probable” events in your local property market. Valuers do not consider predictions, market trend assessments, and sentiments. This is why lenders are confident with the report of valuers—because they report the actual value.
Learning to assess things from the perspective of a valuer can help you determine the areas that need to be improved to generate more returns.