The anticipation of a bank valuer’s visit can often stir unease among property stakeholders. Their role involves scrutinising properties and delivering a verdict to lenders regarding their market value. Particularly during periods of softer property prices, this process can be nerve-wracking. However, much of this discomfort is rooted in the unknown rather than actual concerns.
You might wonder: What exactly does a bank valuer look for? What criteria guide their assessment? And how can I improve my chances of a favourable valuation?
It’s essential to understand that while various professionals can offer estimations of a property’s worth, the opinion that holds the most weight is that of a registered property valuer. Banks rely on their assessment before granting loans, underscoring the importance of their role.
Property valuers operate independently and are extensively trained and qualified. Their evaluations are based on evidence and aim to determine the property’s market value as it stands, without factoring in potential improvements or renovations.
So, what do property valuers do, and how do they determine property values?
Property Assessment Process
A property valuer examines three main elements: the land, the dwelling, and any additional improvements on the site.
They meticulously evaluate factors such as location, size, condition, layout, and utility of the property.
Through site inspections and data analysis, they compile a comprehensive picture of the property.
Sales Evidence
The primary method used by valuers is the Market Approach, which involves comparing the property to recent sales of similar properties in the area.
By analysing comparable sales, valuers determine a fair market value range for the property.
This approach helps ensure an objective and evidence-based assessment of the property’s value.
Report Submission
Valuers provide a detailed report to the banks, outlining their valuation and any associated risks.
Factors such as property condition, market trends, and potential risks are considered in the valuation report.
Property valuers focus on two main methods to determine property value.
Direct Comparison Method: Valuers analyse recent sales of comparable properties in the local area to assess the property’s value. This method accounts for locational factors and provides a benchmark for property valuation.
Summation Method: Valuers calculate the combined value of land and improvements, considering factors such as depreciation and construction costs.
This method requires expertise in assessing property features and market trends.
Valuers consider various aspects when evaluating properties.
Land Facets: Beyond size, valuers assess factors such as shape, topography, position, and views.
These elements influence the value of the land and contribute to the property’s overall worth.
Interior Features: Valuers evaluate the size, layout, condition, and functionality of the dwelling.
Factors such as the number of bedrooms, bathrooms, and the quality of fixtures impact the property’s value.
Neighbourhood Factors: Valuers consider the surrounding properties, amenities, and infrastructure when assessing property value. Proximity to schools, parks, transportation, and retail hubs can influence the property’s desirability and value.
Can property owners influence the valuation process?
While valuers maintain independence, property presentation, completion of unfinished tasks, and providing relevant sales evidence can positively impact the valuation outcome.
Understanding the valuation process empowers property stakeholders to navigate it effectively, leading to better outcomes and informed decision-making.