Investors have several types of valuation service and price guide products from which to choose, here we show you how to determine a property's value in a weekend using tools that everyone can access.
The most basic and usually least expensive is an online valuation. Different products and providers will determine a property’s value in different ways, but usually they offer a ball-park calculation of a property’s value based on quantitative data such as price trends and recent sales.
The second kind of valuation is a desktop assessment which, like an online valuation, does not involve a physical inspection of the property. However, it usually takes into account more than just quantitative data.
The third option is a kerbside valuation, which takes the desktop assessment one step further and involves a drive by the property.
Lastly, there is the full inspection, which involves the valuer going through the property and taking into account both its specific features as well as data such as recent selling prices for similar properties.
An online valuation can often be a useful tool in the research process – if you’re looking for a ball-park figure. But such valuations should really only be used as a starting point, and should definitely be approached with a degree of caution.
The Real Estate Institute of New South Wales (REINSW) and the Australian Property Institute (API) have recently both expressed concerns about free online valuations.
API national president Philip Western says it is important to understand that free valuations are based on quantitative information only.
“They do not involve an inspection of the property, do not take into account the actual condition of the property and should not ultimately be relied upon by consumers as a substitute for an independent valuation,” he says.
Despite these concerns, however, online valuations do have a role to play, says RP Data research analyst, Cameron Kusher.
“[RP Data’s online valuation service] is not there to replace the valuation,” he says. “It’s there to provide a guide and allow people to be more informed when making a decision about purchasing a property.
“It gives [buyers] an indication straight off the bat whether they can or can’t afford that house, but what we’re doing certainly doesn’t replace a valuation. People should still go and get a full valuation if they’re seriously looking at a property.”
While a full valuation will be the most accurate assessment of a property’s market value, it is still up to the individual investor to decide which option they use, and this may depend upon their financial position, the level of accuracy required and their purchasing intentions.
In any case, it is worth noting that a full valuation offers investors more than just a price guide; it can also deliver a valuable assessment of the local area, market trends and the local market conditions’ likely impact on the property’s value at future sale.
“It’s not just price,” says Mr Hegney. “A valuation can extend to what’s going on in the area, whether there might be zoning changes, for example, or maybe whether there’s a building addition which looks like it hasn’t had clearance.
“It’s a bit like someone holding your hand and saying this is what you should and shouldn’t do and this is what you need to be aware of.”
What will it cost you?
The price of a valuation will vary depending on the type you choose and on the valuer you select. Some online valuations will be under $50 or even free, but for a thorough service, you should expect to pay between $300 and $800 – and it may well prove to be money well spent.