Introduction to property valuation
The thought of determining a property’s value would probably give most of us a headache. The market and the methodology behind valuations can seem impenetrable. It takes years of training and practical experience to do it accurately.
That’s where an independent property valuation in Darwin can help you.
You may know that real estate agents and banks can offer similar services, but there are some important differences. The services offered by licensed valuers are far more comprehensive and multipurpose, for starters.
A good valuation service is:
- completely impartial
- based on rigorous, well-proven methods
- legally certified
- centred on market research and analysis
- tailored to your specific needs
Independent valuations are without a doubt the most effective and exhaustive means to calculate any property’s value. Whether that be residential, industrial, commercial or retail.
There are many reasons you may need a valuation, including:
- buying or selling
- various legal affairs
- calculating certain taxes
- financial planning or reporting
- government compliance
All these purposes require a detailed, in-depth valuation report. This calls on highly specialised knowledge of various property types, taxes, areas and more. That means you need the right kind of professional on your side.
What is an independent property valuation?
An independent property valuation is ultimately a report detailing the value of any property. For certain services, these reports could be either short form or long form.
Short-form valuations are still extensive and trustworthy, but not applicable to your legal affairs. They still include deep market analysis, inspections and more. On the other hand, long-form reports are developed for legal procedures or commercial valuations. They are considerably more in-depth and contain a higher level of analysis than short-form reports.
Types of valuation services include:
- capital gains tax valuation
- deceased estate valuation
- stamp duty valuation
- insurance valuation
- internal accounting valuation
As you can tell, the reasons for seeking out a valuation are many.
Most valuations are conducted using three primary methods:
- the direct comparison approach
- the summation approach
- the capitalisation of net income approach
The direct comparison approaches leverages comprehensive industry databases to compare your property against recent sales in the local area. This also involves reviewing zoning restrictions, conducting internal and external inspections, assessing pending developments and more.
Summation involves calculating the costs involved in constructing the property, while the capitalisation of net income approach looks at income generated to determine value.
What are independent property valuers?
The independent valuation of property should only be carried out by a Certified Practising Valuer (CPV). They also need to be a registered member of the Australian Property Institute (API).
An independent valuer has:
- all the necessary tertiary qualifications
- two years of exclusive API training
- completed a professional API interview
- years of practical experience completing real valuations
- access to continuous professional training developed by the API
The API is arguably the most esteemed property organisation in the country. As a result, their graduate members are the most sought-after professionals in the Australian industry. These CPVs are ingrained with unmatched standards for accuracy, consistency and objectivity.
What separates a CPV from the others?
Licensed valuers are entirely distinct from real estate agents and bank valuers. Real estate agents are mostly concerned with buying, selling or renting out property. Their commission structure is tied to that and their appraisals are based only on what a property could sell or rent for in their opinion.
On the other hand, bank valuers work on behalf of the bank. In the case of a home loan, for instance, a bank valuer determines the value of your property to find out if its sale would cover their losses should you fail to pay your mortgage.
Neither of these could be considered impartial. As real estate agent’s earnings are tied to the value of a sale, there is a conflict of interest. Banks, however, serve their own interests and generally deliver conservative estimates that may not represent the full picture.
A CPV reports on either retrospective or current market value with total objectivity.
How much does an independent property valuation cost?
The price of a property valuation is heavily dependent on the valuation purpose itself.
There is no blanket cost that covers a wide range of services. Instead, like the services themselves, the costs involved are catered to your individual needs. A residential property valuation would be priced differently from a commercial property valuation. A capital gains tax valuation differently from a stamp duty valuation. Long-form reports are more expensive than short-form reports as well.
What you’re paying for is up to decades worth of property market expertise. The services of a licensed valuer who will have completed hundreds of successful valuations, at the least.
Summary
A property valuation is the ultimate security in the value of your property.
It’s a detailed report illustrating the proven methods used to accurately determine your property’s past or current market value. It uses a combination of market comparison, as well as income and cost analysis to arrive at a final determination.
Certified Practising Valuers are trained by the Australian Property Institute to uphold strict standards for quality and accuracy. They work with transparently and are happy to answer the most in-depth questions about your property and the valuation process.
Unlike both bank valuers and real estate agents, CPVs can provide entirely objective property valuation reports that are legally certified. This allows you to submit your valuation report for numerous property-related legal obligations.
For a better idea of how valuations work, reach out to one of our certified valuation experts today.