When it comes to property value, everyone seems to have an opinion. But if you’re looking to borrow, the only opinion that matters is that of your banks’.
Whether you’re looking to buy, refinance or simply to access equity, the lender will always want to assess how much your property is worth.
So how do you find out how much your home is worth?
How much is my house worth now?
Your home value depends on a number of things including:
- Land value
- Home improvements or renovations
- Comparable sales
- Construction costs
- Property characteristics
You can quickly get an indication of the value of your property by looking at other similar properties that have recently been sold in your area.
When you’re taking out home loan, getting an upfront valuation can significantly speed up your application.
Our solid relationship with many lenders allows us to order a free valuation for you with some banks even before you submit your application.
A number of our other lenders are also able to do upfront valuations on a case-by-case basis.
Contact one of our expert mortgage brokers to see which banks will give the best value for your property. Call us on 1300 889 743 or complete our free assessment form to find out more.
Is there a way to avoid a bank valuation?
As a general rule, the banks will always want to know the value of the property they’re lending against.
When borrowing more than 85% LVR, banks often require a full valuation. However, this is not always the case.
If you’re buying a standard bread and butter home that’s considered low risk, some lender may just require a desktop valuation or automated valuation.
Some banks may also simply take the price on the Contract of Sale as the value as long as you meet the following criteria:
- You’re borrowing 80% of the property value or lower
- You’re borrowing to buy a property
- Your loan amount is below $800,000
- The property is located in a capital city or major regional centres
- You can provide full evidence of income
- You’re buying through a registered real estate agent
- You are not related to the seller
- You’re buying an existing property (not off-the-plan or new building)
We know some lenders don’t always require a full valuation. You can discuss this with one of our mortgage brokers by calling us on 1300 889 743 or by filling in our free online assessment form.
Should I use an electronic valuation?
Electronic valuation or Automated Valuation Models or AVMs are computer-generated value estimates based on the property data and recent comparable sales.
This doesn’t require or need an input from a valuer unlike desktop valuation. They’re particularly useful if you’re looking to quickly gauge the value of your property.
Can I trust my agent’s appraisal?
Agents generally offer free appraisal to potential vendors. But beware that this just a price estimate based on some comparable sales in the area.
It’s a good starting point but it’s by no means the real market valuation.
If you’re selling or looking to access equity on your home, you might find that an agent’s appraisal can be vastly different from the bank valuation.
In general, an agent’s appraisal is on the bullish side as they’re trying to win the vendor’s business.
The problem with this is if the bank valuation comes lower, then you’d have to readjust your asking price if you’re selling.
If you’re buying, this also means you’re paying above market value.
How reliable is a desktop valuation?
As the name suggests, a desktop valuation involves a qualified valuer doing all the work on their desk, without physically visiting the property.
They take into account the property’s attributes, photos, and comparable sales to come up with the value of the property.
Desktop valuations are often used for loans under 80% and are generally done within a day.
The downside is that while it’s still performed by a qualified valuer, desktop valuation makes a lot of assumptions including the property is in reasonable conditions.
Since there’s no physical inspection of the property, if you’ve renovated, this will not be reflected in the valuation. You could end up having lower than expected valuation despite your efforts.
What truly adds value to your property?
When it comes to determining what adds value to your home, there’s no definitive list. Markets are all different around the country.
Therefore what’s considered high value in some areas may not be so important in other areas.
However, there are some things that have been proven to be universally in high demand and consequently improved the property’s sale price and marketability. This include:
- Bright and well-laid out kitchen
- Neutral colours and modern furnishing
- Locked up garage, especially in inner city areas
- Modern bathrooms
- Plenty of storage such as built-in or walk-in wardrobes
As you’ve probably realised by now, property valuation is not an exact science.
What this means is that the valuers can be subjective in their interpretation of the characteristic of the property and market conditions at a given point in time.
In other words, they can be influenced by their own bias so it’s not surprising that they are often challenged on how they arrived at the figure.
Here are some things to keep in mind when getting your property valued:
Cost doesn’t automatically equal value.
What this means is that the cost you incur either building an extension or renovating doesn’t automatically translate to an equal boost in value.
For example, you spent $20,000 renovating your home. Don’t expect the valuer to automatically add $20,000 to your home value.
This is not to say your property didn’t increase in value, but it’s risky to assume you will always get the valuation you want based on how much you spent renovating.
Listed price doesn’t necessarily reflect the true value of your property.
Vendors aim for the maximum sale price and they’re always listed above market value.
Agent appraisal is just an estimate.
Don’t rely solely on the agent’s appraisal when making your decision.
Size does matter.
If you’re tempted to convert the living area into another small room, think twice.
Tiny bedrooms make the house cramped and less livable and therefore in less demand compared to a spacious home with a fewer number of bedrooms.
First and last impression count.
This is 100% true when your property is getting valued. The valuer will be influenced by the first and last things he or she sees. Make sure you prepare the property well to impress the valuer. Afterall, they’re only human.
Do you want to know how much your house is worth now?
The quickest way to do this is to ask your mortgage broker to provide you with comparable sales so you can quickly estimate the value of your property.
We can also order multiple bank valuations before lodging an application for you! You can discuss this with one of our mortgage brokers by calling us on 1300 889 743 or by filling in our free online assessment form.