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Understanding property valuations

Understanding property valuations

Property valuations are one of the trickier parts of investment. We know they exist and we know they’re important – but why?

To the unexperienced, it seems as though they could be subjective and each person could perceive a property’s worth differently, but in Australia there are very strict regulations on not only how to value a property, but when a property valuation needs to be obtained.

So today let’s learn about property valuations – what is it, why is it useful, when you need one and how it happens. PLUS we’ve included some investment tips below on how to actually find an investment property that has a good property value, not just a great return on investment.


What is it?

A property valuation is a way of measuring a property’s worth. This helps banks to provide accurate bank loans with the best manageable risk, to give people an idea of how much they should hope to receive if they sold their property and conversely how much to pay when purchasing a property. It is also a critical part of managing a mortgage and whenever a banking client wishes to refinance or top up an existing loan, a new valuation is required.


Types of valuations

Automated Valuation: A quick guage of the property’s estimated market worth. It uses sales statistics, average capital growth statistics and government data to give an estimate of a property’s worth. This is more beneficial for its market worth when you are selling or buying as a lot of the data is comparison data.


Qualified Valuer: A certified property valuer gives a very detailed assessment of the property to determine its value. Things like size, room types and numbers, location, structure and condition, presentation, quality of fit out, improvements required, ease of access, facilities, zoning are taken into consideration and then coupled with the data from an automated valuation to give a much more accurate indication.


Qualified Valuer vs a Real Estate Agent 

A certified property valuation is likely to differ from a real estate agent’s opinion on an expected selling range as they have different purposes. The valuation is to assess a property for its true value and is required legally by banks as part of the mortgage process. The real estate agent’s indicative selling range takes into account supply and demand for property and how much people are willing to pay for it – which is often completely different from its true value.


Identifying an investment with great ROI and property value 

  • Consider sturdy structures so when buying a hosue and land package, use reputable builders.
  • Identify regions that are likely to have strong and steady economic growth over the next two decades.
  • Ensure there are covered areas for vehicles.
  • Identify streets or sites where community amenities are (or will be) close including schools, convenience retail, community spaces like parks and playgrounds.
  • Ensure the building size is ample for the expected number of occupants. Properties can lose value if they are built as a four-bedroom house with the floor area of a two-bedroom apartment.


Do you have any questions on property valuation? Ask us in the comments below! 


Jarryd Fisher

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