Whether you’re buying or selling or want to know what your home is worth, getting an accurate property valuation is crucial. But the valuation process isn’t as straightforward as you might think. If you’re not careful, many potential pitfalls can throw off the estimated value.
At Australian Valuations, we’ve seen everything go wrong with property valuations. That’s why we’re sharing some of the most common errors to watch out for. Knowing what to avoid can help ensure your valuation is on the money.
Letting Emotions Get in the Way
One of the biggest mistakes homeowners make is letting their emotions cloud their judgment of their property’s worth. Property can hold deep sentimental value, whether it’s the house you raised your kids in or your first home purchase.
But when it comes to valuations, you must remove those rose-coloured glasses. Overvaluing based on emotional attachment rather than market realities can set you up for disappointment.
Similarly, sellers sometimes ask for an unrealistically high price because they resent letting go of the home or want to recoup every dollar spent on renovations and upgrades. Unfortunately, buyers won’t pay a premium for your attachment or memories made in the house.
Not Understanding the Local Market
Every property market is unique, with its trends, pricing fluctuations, and factors impacting values. Broader national averages or even city-wide data may not accurately reflect what’s happening on a neighbourhood level.
That’s why it’s critical to work with a certified property valuer like the team at Australian Valuations, who has specialised knowledge in a specific area. We study location-specific market dynamics, comparable recent sales, growth forecasts, and more to calculate what your property is truly worth in the current market.
Overlooking Needed Repairs and Renovations
You might still see your property through those fresh, move-in-ready eyes. But over time, normal wear-and-tear can take a toll that impacts value in ways you may not even notice.
During a valuation, even seemingly minor repair needs like a leaky faucet, scraped paint or a dated kitchen can mean thousands deducted from the estimated value. The same goes for significant systems like roofing, plumbing, or HVAC, which may need replacing soon.
One of the biggest property value drains is deferred maintenance on structural issues like foundations, framing, or moisture damage. These aren’t just expensive fixes but can seriously undermine a property’s safety and livability.
Basing Value on Your Purchase Price
We’ve all daydreamed about that fantasy home value appreciation where your property doubles in worth after just a few years of ownership. Sadly, that’s far from the norm in most markets.
Your original purchase price has virtually no bearing on current market value, whether you bought five years ago or fifty. Myriad factors like neighbourhood changes, interest rates, economic conditions, and more mean your home’s value rises and falls in ways often disconnected from what you originally paid.
Not Knowing All the Valuation Approaches
Did you know valuers use three different approaches to calculate a property’s worth? Familiarity with all three methodologies ensures your valuation captures the most accurate picture.
The sales comparison approach looks at similar, recent sales of properties with comparable locations, square footage, age, construction quality and condition. This is probably what comes to mind when considering a traditional property “appraisal.”
However, valuers also use the cost approach, which estimates how much it would cost to replace the structure after deducting depreciation and land value. Finally, the income capitalisation for income-producing properties like apartment buildings helps determine value based on those units’ revenue.
At Australian Valuations, our certified valuers are experts in these valuation models. We develop a comprehensive report drawing on multiple techniques to accurately assess the market value assessments of different property types.
Failing to Prepare Properly
While the legwork happens on the valuer’s end, there are some things you, as the homeowner, can do to ensure a smooth, accurate valuation process:
- Provide complete documentation like surveys, plans, etc.
- Disclose any known issues with the property
- Make sure all areas are accessible for inspection
- Have maintenance records and utility bills handy
- Tidy up and remove clutter for better impressions
It’s a valuer’s job to remain impartial. But by being upfront and making things easy to inspect, you’ll start off on a positive note.
Cheap “Computer-Only” Valuations
In today’s digital age, plenty of websites and online tools promise instant computer-generated property valuations for cheap or even free. While perhaps better than a wild guess, these automated estimates are often wildly inaccurate.
Without eyes on the actual property, these algorithms can’t account for the unique factors and conditions impacting a specific home’s value. They rely solely on comprehensive data that can easily distort the number up or down.
The Value of Getting it Right
Any costly errors in a property valuation mean leaving money on the table – whether you’re the buyer, seller, lender or homeowner. Australian Valuations has been the trusted name for accurate, impartial valuations for decades, thanks to our industry-leading valuers who take pride in exceptional service.
So, if you have an upcoming property valuation need, don’t risk getting an inflated, deflated, or just plain wrong number that can jeopardise your real estate investment. Reach out to the property value experts at Australian Valuations and breathe easy, knowing you’re getting an honest, expert assessment of how you can make significant decisions.
