One of the first things most homeowners want to know before putting their house up for sale is how much it is worth. So do you get an appraisal or a valuation? If you are thinking of selling your property, you are better off getting an appraisal from a real estate agent, than a valuation which tends to be a more conservative assessment of property value. The two terms are often used interchangeably and at Real Estate Real Easy we have found many Gold Coasters don’t realise that there is actually a difference between appraisals and valuations.
So, what is an appraisal?
A property appraisal is usually carried out by a professional real estate agent to be used as a guide to property value. An appraisal allows you to get a good understanding of where to set your asking price.
Choose a real estate professional who has a good knowledge of the market in your area. A local agent who is familiar with the houses in your suburb will be able to give you their professional assessment of your property in relation to other properties in the area. A reputable agent will have a good understanding of the price that other homes have sold for and can give you an estimate based on their professional experience. An appraisal is based on your real estate agent’s opinion, there are no formal criteria involved and is usually performed free of charge.
Since appraisals are based on an agent’s opinion, you may like to get appraisals from more than one real estate agent.
What is a property valuation?
A property valuation is a formal determination of value which must be performed by a qualified valuer. When you apply for a mortgage, your lender will require a formal valuation report. The report takes about 2 or 3 days and considers the following:
- The property’s location
- Land size
- Condition of the property
- Features of the home including a number of rooms, living areas etc.
- Risk rating
- Environmental issues
- Local Council zoning
- Encumbrances on the property
These criteria are always included, but other aspects may be taken into consideration. Valuations are usually performed for banking or legal purposes such as applying for a home loan or establishing the value of a deceased estate and as such tend to be more conservative than appraisals. Similarly, a court can request a valuation to resolve property disputes and settlements.
Unlike appraisals, formal valuations are not performed free of charge. A valuation report costs approximately $300-$500. When you apply for a mortgage, your lender will usually charge you the cost of the valuation along with a number of other associated fees.
Should you get an appraisal or a valuation?
As a seller, you should get an appraisal and as a buyer, you would get a valuation. An appraisal is a guide to property value and helps you position your property in the market. A valuation is the formal opinion of value used for banking and legal purposes. Each lender will require a valuation from a professional of their choosing and bill the mortgage applicant (buyer) for the service.