All you need to know about the Property Valuation process

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• October 22, 2021
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When you consider buying or selling a property, the first thing you think about is the price, but you forget an important fact, the value. Indeed, value and price are not the same because one thing is the price that it has, and another is the value that we give it and where emotional, synergy or investment factors influence. Therefore, it is advisable to have an official Appraisal for property in Melbourne that prepares an appraisal report.

What is a Property Appraisal?

Property Appraisal is a process through which the official value of some property is known. For this, a series of legal parameters are followed. Due to its nature applicable to assets, several assets or properties can be appraised. However, the most common appraisals are for real estate, business, personal property, and works of art, jewellery, vehicles and boats.

Additionally, another term that is also generated when knowing the value of an interest is the valuation and valuation report. These concepts may or may not merge in certain circumstances, so it is necessary to identify each one.

What is an official appraisal and who can do it?

In principle, it should be noted that an official Property appraisal is an activity carried out by appraisal professionals, through which the value of a property, whether movable or immovable, is determined. This type of activity must comply with certain parameters and follow a certain methodology in its preparation.

However, this appraisal is carried out by accredited professionals through Professional Colleges or Associations. Its function is based on valuing and certifying a certain asset, analyzing the market and the characteristics of the asset being appraised.

What is the appraisal report?

The appraisal report is the official document by which a professional, appraiser carries out a study of the property to find out how much it is valued. For this, it is based on different factors, such as location, orientation, age, and building or energy efficiency, among others. Likewise, it studies witness or comparable properties, that is, those similar to the object of analysis or valuation.

What is included in the appraisal report?

Apart from setting an objective amount of the value of the property, it also gathers registry and cadastral information. In addition, it includes the plan of the property, the urban situation, if tenants reside or the charges that may be levied on the property. All these data are important because they can directly influence the appraisal value.

These are required information that must be included in the Property appraisal report:

• Data of the applicant and the purpose
• Identification and location
• Verification and documentation of the property
• Location and environment: population profile and infrastructures (transport, services, educational centers, shops, etc.).
• Description and surface area of the land and/or building
• Urban description: it is verified that the characteristics and uses of the property are adapted to urban planning and that it is subject to some type of urban protection.
• Protection, tenure and Occupation Regime
• Market analysis
• Information and calculations of technical values
• Property Appraisal values

Factors that influence when valuing a property

When valuing a property we must take into account the characteristics of the property itself, but also factors related to its location and the state of the real estate market. We are going to specify all these issues.

On the one hand, we must take into account the characteristics of the property itself, what we could call “indoor factors”. For example, the habitable square meters, the number of rooms and bathrooms, if it has a swimming pool and/or parking, its age and its energy efficiency.

Also, we have the “outdoor factors” because the price of the property influences what city it is in, what neighbourhood, and even what street. Along with these, are there more factors-

• The state of the property: the appraiser will review the conditions of the property in depth. Its conservation will greatly influence the final value.
• Its age: it is the time that the property has been useful, and how much it could have in the future.
• Structure: materials and structure used to make the good.
• Area: square meters and distribution that the house has.
• Location: where the property is located. This greatly influences the home. Regardless of its facade or general condition, the neighborhood or urbanization in which it is located makes its value vary.
• Services: it is related to its location and refers to the proximity of the property to basic services. Like hospitals, schools, supermarkets, parks, subway or train stations, or even main avenues.

How a Property appraisal is done?

To carry out an appraisal process, the competent professional must carry out five basic checks that are mandatory before signing and making the appraisal report official. These five basic checks are as follows:

• Identification and recognition of the property.
• State of occupation and intended use.
• Public protection regime in the case of housing.
• Urban protection.
• Adaptation to urban regulations.

After these checks, the appraiser comes to visit the property and performs an inspection of both the interior and exterior. Next, the professional is in charge of the search for real estate witnesses. With this study, the appraisal report can be prepared, which must be validated by an appraisal company to be used.

How is the appraised value calculated?

First, it is important to emphasize that the “Appraiser” is an accredited professional with a degree and experience in the matter. However, not only this knowledge and studies are enough for an appropriate appraisal to be made. Several valuation methods must also be taken into account, including:

• Comparison method: it is the most used and consists of giving value to the property based on the comparison with other goods that have similar characteristics. In this case, the appropriate samples must be selected and homogenized accordingly.
• The Capitalization method: what happens when the property is capable of producing income? Consequently, in this type of method, a logical and accurate estimate of their amount can be made.
• Residual Method: this consists of giving the value to the property that the construction would have when it is finished. Next, the expenses incurred are subtracted so that the real estate reaches that phase.
• Cost method: it is about replicating how much it would cost to make good with similar or the same characteristics.

Real Estate Property Appraisal – Trust on Expert Service!

Many factors influence when valuing of a property and there are several ways to obtain a valuation. From DELORENZO PROPERTY GROUP, we can help you obtain a professional real estate appraisal. We know the state of the market and our agents have extensive experience in appraisals.

Do you need to know the market value of the real estate? Our team of appraisers can carry out the appraisal and issue an objective appraisal report.

FAQ’s

What is the job of a Property appraisal company?

The Property appraisal company validates the information provided in the document. It deepens the analysis with values and prices offered by official sources not only from the current moment but also from historical data to give a prudent and sustainable final value over time.

How long does it take to issue the appraisal report?

From the time the property is visited until the appraisal report is delivered to the owner, it takes around 48 to 72 hours. However, the use of new technologies, such as drones, and blockchain networks with Smart Contracts will allow in the future to have it almost in real-time.

How much does it cost to appraise a home and how long does the report last?

The price paid for an appraisal varies significantly depending on the type of property to be valued, its size and its location.

How valid is the report?

In Australia, a Property appraisal is effective for six months or up to a year from the issuance of the official document.