This week, we’re diving into the world of property valuation reports. We have five valuable tips that will help you make sense of your property valuation report and gain a deeper understanding of its contents.
1. The Difference Between a Bank Valuation and a Market Valuation.
There’s a significant distinction between a bank valuation and a market valuation. When the bank sends a property valuer to assess your property, they take a conservative approach. After all, they are the ones providing the funds for your property purchase. Their valuation is based on recent market sales.
In contrast, a real estate agent’s valuation considers the property’s listing and may have more awareness of the demand and recent sales performance. Understanding this difference can help you manage your expectations.
2. What is a CMA Report?
In the world of property valuations, you may come across the term “CMA report.” CMA stands for Comparative Market Analysis. This report provides a true market valuation by comparing the target property with similar properties that have recently sold.
Since each property is unique, there will be variations in value. Companies like CoreLogic, RP Data, Price Finder, etc., offer professional valuation reports that allow you to assess how your property compares to recent sales. Remember, every property has its distinct features that can impact its value.
3. Each Property is Unique
It’s essential to remember that each property is unique. Even if two properties share the same land size, there can be significant differences in the build size, construction quality, fit-out, aspect, and location.
Factors like being on a main road versus a side street or cul-de-sac can have a substantial impact on the property’s value. These nuances may not always be reflected in a bank valuation, which is why it might not align with your expectations. Keeping the uniqueness of each property in mind will help you interpret the valuation report more accurately.
4. New vs. Existing Properties
When valuing a new property, appraisers often compare it to older existing properties. However, buildings devalue over time, making it challenging to draw a direct comparison between new and old properties.
This discrepancy between new and existing properties can lead to disparities in valuations. Understanding this disparity will assist you in comprehending the rationale behind the valuation figures.
5. Challenging a Valuation
If you need the valuation for finance purposes and find yourself disagreeing with the assigned value, you have the option to challenge it. Although success is not guaranteed, it’s worth exploring.
Start by discussing the matter with your finance specialist, bank, or broker. They may suggest ordering another valuation report from a different valuer.
Additionally, providing evidence of recent sales, such as the CMA report we mentioned earlier, can be beneficial. Sharing this information with the valuer may prompt a reassessment.
Remember, bank valuations tend to be conservative due to the lending nature of their business, so it’s crucial to approach this process with realistic expectations.
We hope these five tips have shed some light on the intricacies of understanding a property valuation report.
If you would like to discuss your property options further, you can book a time my calendar for a conversation by clicking here.
Wishing you a productive Tuesday, and we’ll see you next week for more top tips!
Regards,
Geoff Tomkins
Buyers Advocate
PH: 0404 852 781
