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What adds value to a house appraisal?

What adds value to a house appraisal?

Thinking about selling your property? By making a few changes to enhance your property’s appeal to potential buyers, you may be able to maximise the house value at your real estate agent’s appraisal. This could help to set buyer expectations, leading to a higher sale price.

What exactly is a property appraisal?

It’s important to remember that a property appraisal is not the same as a property valuation. A property valuation is a formal process undertaken by a professional valuer working on behalf of your bank or mortgage lender, whose job it is to determine if the value of your property will be enough to secure your mortgage over the property.

A property appraisal is an informal process conducted by a real estate agent, to estimate how much you might be able to sell your property for. While there’s no guarantee that this will be the final sale price come auction day or after a private sale, your property appraisal can serve as a handy benchmark for setting your auction reserve, asking price, or even working out whether you’re ready to list your property for sale just yet.

Both valuers and real estate agents often use recent sales data from your local area to get a baseline idea of a property’s value, before looking more closely at the fine details. You can get your own estimate by ordering a free property value report

While a real estate agent’s trained eyes should be able to look beyond the surface to see your property’s potential, you may be able to make it easier for them by making a few changes and additions to potentially add value to your property.

Tidy and declutter

Giving your property a spring-clean, no matter the season, can help present it in the best light. You don’t need to get your home spotless – the agent is appraising the home’s value, not conducting an inspection – though this could be a handy dress rehearsal for future open houses, where you want to help buyers with untrained eyes to fall in love with your property. Even just cleaning the windows can change the appearance of a property, letting more light in to really show off the space.

Getting rid of household clutter can also help your property’s potential to shine through. While you may love your ornaments and other knick-knacks, packing away everything but the bare essentials can help your property speak for itself.

Repairs and minor upgrades

Whether you’ve been living in your property or you’ve had tenants in place, your property will likely have suffered some wear and tear over time. Giving the property a general fix up can not only make your house look more impressive for a valuation, but help it last for longer, whether you decide to sell or not.

Look for cracks, leaks, and other minor repairs that can be given quick fixes – if you’ve been putting off these little jobs for ages, now may be time to step up. The bathroom and the kitchen are often among the most high profile sections of the home, so think about paying special attention to these areas.

You can also look into making some superficial upgrades to fixtures and fittings around the home, like adding a fresh coat of paint, or upgrading the doorknobs, taps, and light fittings.

Update appliances

Sometimes the difference between a basic kitchen and a modern one is a quality cooktop, oven, dishwasher or rangehood. New and matching appliances from quality brands may be able to enhance your kitchen’s overall value beyond their original price points.

Spruce up the garden

A well-kept garden can help demonstrate a property’s potential before the agent or a buyer steps foot inside.

The more gardening and/or landscaping work you can do beforehand, the less a buyer will have to do later, and the more they may choose to pay for the privilege, even if it requires extra maintenance to keep things green in the long term.

Add storage

A property isn’t just home to people and pets – it’s also a place to keep your possessions. Buyers could potentially see more value in a property that offers a variety of convenient storage solutions.

Adding or upgrading cupboards, built in wardrobes, or sheds can be valuable to buyers. If your property has an attic or storage space under the house, make sure that these are clean and in good repair.

Renovate

Bigger renovations, such as adding extensions, changing your property’s layout, or a new kitchen or bathroom could potentially add significant value to your home. Some renovations can affect the whole property, such as replacing the floorboards. 

That said, beware the risk of overcapitalising. Not all improvements add value to a house, and some may be expensive. Spending too much money on improvements to your property could leave you short if the appraisal and/or sale price doesn’t turn out how you wanted.

Sometimes smaller renovations such as replacing the property’s doors or adding an air conditioning system can make a more significant impact on your property’s appraisal when compared to their cost.

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This article was reviewed by Personal Finance Editor Georgia Brown before it was published as part of RateCity's Fact Check process.

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Learn more about home loans

What is my property value?

Your property’s value is how much your property is worth to a bank or mortgage lender, when it comes to securing a mortgage over a property and calculating the loan to value ratio (LVR).

A professional valuer assesses a property’s value based on data about the property, its sale history, and other recent sales in the area. The valuer may also visit the property to assess its condition in person.

A property’s value may be different to a real estate agent’s appraisal, which indicates how much a property may sell for. It’s also often different to a property’s sale price at auction or private sale, which shows how much a buyer thinks it’s worth in the current market. 

What is a property report estimate?

A property report estimate is an approximate calculation of a property’s value, found in an online property report. These estimates are typically based on the property’s age, size, location, and number of bedrooms, bathrooms and car spaces. The property’s history of previous sales, plus recent sales of similar properties in the local area, may also help to calculate the property’s current value. 

Is it free to get your house appraised?

A house appraisal, in which a qualified real estate agent assesses a property to make an estimate of its value, is a service that is generally offered to homeowners free of charge.

Local real estate agents tend to offer free property appraisals to homeowners as a way to build a relationship with them, and potentially secure the listing if the homeowner has plans to sell.

It can also be a good opportunity for the homeowner to gauge the agent’s level of expertise and determine whether or not they would be an ideal listing agent for the sale of their home.

You may also like to consider using an online service like RateCity to get a free property value report. Similar to an appraisal, the report is a computer generated valuation based on a significant amount of data and insights, and can provide details including the estimated property price and information about similar properties for sale or recently sold in the area.

What is a valuation?

A property valuation is a formal assessment of how much your home is worth, to determine the Loan to Value Ratio (LVR) when you’re applying for a mortgage.

A valuation is carried out by a certified practicing valuer on behalf of a bank or mortgage lender, and is often based on available data about the property and recent sales of other similar properties in the local area. The valuer may also visit the property to assess its condition in person.

A valuation is typically different to an appraisal from a real estate agent, which is an informal estimate of how much a property could sell for at auction or via private sale.

What is an appraisal?

An appraisal is the process by which a qualified real estate agent conducts an inspection and assessment of a property in order to make an educated estimate of its value, typically in preparation of it being listed for sale. It is not to be confused with a valuation, which is conducted by a Certified Practising Valuer on behalf of a mortgage lender to determine the Loan to Value Ratio in relation to the borrow amount.

To begin the appraisal, the agent will start by visiting the property and assessing features such as the size, layout, number of bedrooms and bathrooms, quality of fixtures and fittings, and how well it has been maintained.

Next, the agent will use the findings to compare the property the with other similar properties in the area that have recently sold. In doing so, they are able to determine a more accurate appraisal that is representative of the current market demand.

How much is my house worth?

Your house’s worth may depend on its age, size, location, and overall condition. This may be affected by its number of bedrooms, bathrooms and car spaces, as well as its previous sale history, plus recent sales of similar properties in the local area. A property report provides a summary of this information to help you make an estimate.

You may get a different estimate of how much your house is worth if you ask a real estate agent, a professional valuer, or a property purchaser at an auction or private sale. This is because an appraisal from a real estate agent is an estimate of how much your house could sell for; a valuation is a professional assessment of whether your home’s value is enough to secure a mortgage; and a sale price is how much a buyer thinks your house is worth on the current market. 

What is a valuation and valuation fee?

A valuation is an assessment of what your home is worth, calculated by a professional valuer. A valuation report is typically required whenever a property is bought, sold or refinanced. The valuation fee is paid to cover the cost of preparing a valuation report.

Why does Westpac charge an early termination fee for home loans?

The Westpac home loan early termination fee or break cost is applicable if you have a fixed rate home loan and repay part of or the whole outstanding amount before the fixed period ends. If you’re switching between products before the fixed period ends, you’ll pay a switching break cost and an administrative fee. 

The Westpac home loan early termination fee may not apply if you repay an amount below the prepayment threshold. The prepayment threshold is the amount Westpac allows you to repay during the fixed period outside your regular repayments.

Westpac charges this fee because when you take out a home loan, the bank borrows the funds with wholesale rates available to banks and lenders. Westpac will then work out your interest rate based on you making regular repayments for a fixed period. If you repay before this period ends, the lender may incur a loss if there is any change in the wholesale rate of interest.

When do mortgage payments start after settlement?

Generally speaking, your first mortgage payment falls due one month after the settlement date. However, this may vary based on your mortgage terms. You can check the exact date by contacting your lender.

Usually your settlement agent will meet the seller’s representatives to exchange documents at an agreed place and time. The balance purchase price is paid to the seller. The lender will register a mortgage against your title and give you the funds to purchase the new home.

Once the settlement process is complete, the lender allows you to draw down the loan. The loan amount is debited from your loan account. As soon as the settlement paperwork is sorted, you can collect the keys to your new home and work your way through the moving-in checklist.

What is a secured home loan?

When the lender creates a mortgage on your property, they’re offering you a secured home loan. It means you’re offering the property as security to the lender who holds this security against the risk of default or any delays in home loan repayments. Suppose you’re unable to repay the loan. In this case, the lender can take ownership of your property and sell it to recover any outstanding funds you owe. The lender retains this hold over your property until you repay the entire loan amount.

If you take out a secured home loan, you may be charged a lower interest rate. The amount you can borrow depends on the property’s value and the deposit you can pay upfront. Generally, lenders allow you to borrow between 80 per cent and 90 per cent of the property value as the loan. Often, you’ll need Lenders Mortgage Insurance (LMI) if the deposit is less than 20 per cent of the property value. Lenders will also do a property valuation to ensure you’re borrowing enough to cover the purchase. 

What is equity and home equity?

The percentage of a property effectively ‘owned’ by the borrower, equity is calculated by subtracting the amount currently owing on a mortgage from the property’s current value. As you pay back your mortgage’s principal, your home equity increases. Equity can be affected by changes in market value or improvements to your property.

What is a line of credit?

A line of credit, also known as a home equity loan, is a type of mortgage that allows you to borrow money using the equity in your property.

Equity is the value of your property, less any outstanding debt against it. For example, if you have a $500,000 property and a $300,000 mortgage against the property, then you have $200,000 equity. This is the portion of the property that you actually own.

This type of loan is a flexible mortgage that allows you to draw on funds when you need them, similar to a credit card.

What are the features of home loans for expats from Westpac?

If you’re an Australian citizen living and working abroad, you can borrow to buy a property in Australia. With a Westpac non-resident home loan, you can borrow up to 80 per cent of the property value to purchase a property whilst living overseas. The minimum loan amount for these loans is $25,000, with a maximum loan term of 30 years.

The interest rates and other fees for Westpac non-resident home loans are the same as regular home loans offered to borrowers living in Australia. You’ll have to submit proof of income, six-month bank statements, an employment letter, and your last two payslips. You may also be required to submit a copy of your passport and visa that shows you’re allowed to live and work abroad.

What is appraised value?

An estimation of a property’s value before beginning the mortgage approval process. An appraiser (or valuer) is an expert who estimates the value of a property. The lender generally selects the appraiser or valuer before sanctioning the loan.