What Is a Property Valuation?
A Wide Range of Factors Influence Property Valuation
Unlike your real estate agent’s informal assessment of the home’s worth, a property valuation must take into account all of the factors that affect the home’s value. While a real estate agent might look at comparable homes in the neighbourhood and come up with an estimate, a licensed property valuer must dig much deeper to come up with the home’s true worth.
Not only do property valuers look at the prices of comparable homes in the area, but they also must measure the area of both the home and the land it sits on, count the number of rooms, list all the home’s amenities, conduct a thorough inspection to uncover any structural problems or other issues, list and measure outbuildings—like garages, storage sheds, and carports—and assess the value of the home’s components: cabinetry, countertops, floors, and other factors that affect the home’s value.
Usually, a property valuer will take quite a few photos of the home to document his or her findings. The law requires property valuers to produce a detailed report to make sure the home’s selling price is a fair one. After the inspection, the registered property valuer will take a look at any restrictions on land use, whether the home has any outstanding liens on it, and the area’s zoning requirements. Together, with an assessment of the recent sales prices of several comparable homes nearby, the valuer will come up with the home’s value.
Property Valuations Are an Important Tool for Lenders
Banks and other lenders use property valuations to determine whether they want to take a risk on lending money to you to buy the home. If you can’t pay the mortgage, the bank wants to know that it can sell the property to recoup their loss.
Use the Property Valuation to Negotiate a Fair Price
Because your home represents a significant investment of your time and money, you should consider hiring a home valuer to double-check to make sure your dream home doesn’t turn into a nightmare. Don’t let your emotions trick you into paying well over a home’s market value. Make sure it’s worth every penny you’ll pay.
Remember, just because a real estate agent tells you that the home is worth more doesn’t make it so. If the home valuation shows that the seller has overpriced the home, you can either re-negotiate or drop the contract and look elsewhere for a home.
Property Valuations Benefit Home Sellers, Too
If you plan to sell your home in the next few years, it might be a good idea to get a property valuation right now to give you a baseline idea of what your home is worth. Armed with all the details, you might want to increase your home’s value with targeted improvements.
First of all, look at the home values in your neighbourhood. If values are stable and look to stay that way, improvements can increase the return on your investment. Next, find ways you can add value to your home without straining your budget.
- Add area to your home: Adding more square metres to your home can bring in more money come sale time. Plan well, though. A design professional can help you select the best location for your addition to make it flow well with the rest of the home’s floor plan.
- Add usable space: Turn a basement or attic into a granny flat or a master bedroom. Carve out a little extra space for a second or third bathroom. Add closet space for more storage. If you don’t have a garage or carport and have room, build one.
- Transform your floor plan for better flow: Walk through your home as if you were a property valuer or a potential buyer. Is the floor plan awkward? If so, consult a design pro to help you create a more logical flow through your home.
- Add street appeal: Add landscaping features to catch potential buyers’ eyes. Trim shrubs and trees so your property looks tidy as well as beautiful. Paint the doors and polish the doorknobs.
- Update the kitchen and the bathroom: As any real estate agent or property valuer will tell you, updates to these key rooms return more value for the money you invest. Keep the new fitouts in character with the home’s overall design for visual continuity throughout.
- Paint: When you get close to the time you want to list your home for sale, apply a fresh coat of paint to areas that have gotten shabby over the years. It’s inexpensive but can add tremendous value to your home.