Understanding how much your home is worth plays an important role in helping you get the most out of one of your biggest financial investments. It gives you a clear picture of how much equity you have built over the years and prevents you from overcapitalising if you are planning to renovate.
To have an accurate estimate of your home’s value, it is advisable to get a professional property valuation. The whole process – including home inspection and release of the valuation report – can take one to a few days but having your property ready can make the experience simpler and more pleasant for both you and the valuer.
What is a home valuation?
A valuation is a formal assessment of how much your home is currently worth. It is often one of the first things you do when you decide to sell your house and is also a requirement when refinancing your mortgage.
A certified practising valuer (CPV) conducts the inspection and evaluates the property’s value based on a range of factors, including the condition of the house, its geographical location, and any improvements undertaken. They then prepare a formal valuation report containing a detailed description of your home, market and sales data of similar properties, how the property’s value was calculated, and other relevant information.
One important thing to remember is that a home valuation is different from a property appraisal. The latter is often conducted by a real estate agent, who provides a price estimate using their knowledge of the local market and recent sales in the area. Unlike a valuation report, an appraisal is not a legally binding document, meaning you cannot use when applying a for loan or refinancing a mortgage.
How does a property valuation work?
Typically, there are two ways valuers conduct home valuations:
1. Direct comparison method
The more common method used by valuers, this approach compares the value of your property with recent sales of similar properties in your neighbourhood. The valuer then makes adjustments based on any material differences between the properties.
2. Summation method
In this method, the value of land is determined using several factors, including its size, shape, location, topography, surrounding infrastructure, and amendments. The values of the improvements done on the land such as architectural features and number of rooms are also taken into consideration.
Before a valuer can conduct a home valuation, they need instructions in writing requesting the process. The request should specify the purpose of the valuation and the valuer’s terms and conditions.
An internal and external inspection of the property is done at the beginning of the valuation. This may take between 30 minutes and a few hours depending on the size of property. The report should be finished in 24 to 48 hours. A property valuation can cost between $200 and $600, depending on the type of the home and report requested.
10 ways to prepare for your home valuation
While a property valuation is typically a straightforward process, it still pays to make the necessary planning and preparation. Here are some practical ways you can make the experience simpler and more pleasant for you and the valuer.
1. Treat your valuer with respect
Common courtesy goes a long way in earning someone’s respect. You must remember that valuers are performing a full-time job that may require them to do several valuations throughout the day. Being on time, welcoming them with a smile, and offering them a drink will give them a positive impression that can last even after the process.
2. Do your research
To come up with a realistic estimate of your home’s value, you can do your own research on comparable homes in your area. This will give you an idea on how much properties there are actually worth. Additionally, valuers tend to respond positively if you can back your estimate with data.
3. Get the important documents ready
The following documents may be needed by the valuer. Having these ready can facilitate the process.
- Contract of sale
- Plan of subdivision
- Certificate of title
- List of any improvements
- Building plans
- Council rates notice
- Owner’s estimate of market value
- Local paper and newspaper sales result
- Market appraisal for a local real estate agent
4. Make sure your house is squeaky clean
Presenting a well-maintained home can make a huge difference during a property valuation, and it is not hard to do. Simple things like mopping or vacuuming floors, mowing the lawn, pressure-washing the front steps, doing the dishes, taking out the garbage, and eliminating clutter help present your house in a positive light.
5. Let in as much light as possible
Natural light can have a positive effect on your home’s perceived value, so let in as much as possible. If this is not possible, you can use other lighting sources to make your house look brighter. The warm glow of a fireplace during winter, for example, can make your place feel more inviting.
6. Create enough space
You should also present your home in way that creates flow and shows how spacious it is. To do this, make sure that your furniture does not block access to rooms, which the valuer needs to check. Having enough space can also enable the valuer to measure the property with ease.
7. Consider updating the kitchen and bathroom
If you plan on doing renovations to increase your home’s value, focus on your kitchen and bathroom. Upgrades on these areas are said to have the most impact in home value as these are high-use and high-traffic rooms.
However, make sure that you are not overdoing your renovations. Some of the less expensive ways to enhance your kitchen’s style include replacing cabinet handles and hardware, updating the splashback, and installing new taps. Small bathroom updates like painting walls, replacing tile grout, and reglazing bathtubs and sinks, meanwhile, can work wonders in enhancing your property’s perceived value.
8. Fix all defects, no matter how small
If there are unfinished or neglected repairs – such as leaking roof, holes in the wall, squeaking doors, and stained paintwork – these can negatively affect how a valuer sees your home. Make sure that basic repairs and maintenance are done prior to the valuation to present your home in a good light.
9. Inform the valuer of any hidden features
It may be good idea to compile a list of your home’s features, especially the ones that are not obvious. This can ensure that the valuer does not overlook anything. You can also give them a copy of the list for reference. Things that cannot easily be noticed include newly installed air conditioning, insulation, solar panels, and flooring. You can also include details of recent renovations and how much they cost.
10. Keep your pets in check
Leaving your pets either inside or locked up outside during a home valuation is not ideal. They may also impede the inspection. Have a friend or pet service care for them off site.