What do valuers look for when valuing a house?

A property valuation may be required when a property is bought, sold, or refinanced. But a professional valuation can be a little different to a real estate appraisal or online report. Understanding some of the differences could help to make sure your valuation is accurate, for a more streamlined and hassle-free transaction.  

What’s the difference between a property valuation and an appraisal? 

If you’re planning to sell your home, your real estate agent may give you their appraisal of how much the property could sell for at auction or by private sale. This appraisal may be based on the size, age, location and condition of your property, combined with the agent’s experience and understanding of the local property market. Based on this appraisal, you may be able to set an asking price and/or an auction reserve price and manage your expectations for your property sale.

However, a professional property valuation is typically required when you apply for a mortgage on a property. Lenders use the valuation to help determine the Loan to Value Ratio (LVR), which is an important part of the process of assessing a home loan application. If the LVR comes back too high, you may need to pay for Lender’s Mortgage Insurance (LMI) to help cover the lender’s higher financial risk. 

Valuers often look at several of the same features of your property as a real estate agent when making their value assessment, but there are some important differences. Real estate agents may be looking at how much a house could sell for in a best-case scenario, assuming the property is well-presented and marketed to enthusiastic potential customers. A valuer will want to know the value of a house if the bank had to sell it “as-is” tomorrow, such as if you were to default on your home loan repayments and the bank was to repossess and sell your home.

What do property valuers look for? 

Because a valuer’s findings are used to help banks make significant financial decisions, valuers are legally responsible for their valuations. Valuers are trained, qualified by professional industry bodies, and registered in their state or territory. 

While different property valuers may use different techniques to assess a property’s value, they follow strict processes and guidelines to help ensure their accuracy.

When valuing a property, a valuer may look at:

• Land: What is the size and shape of the block? Which direction does it face? Where is it located? What is its condition? Is it near shops, schools, playgrounds, transport or other infrastructure? What are the views like? Is there noise? What’s the council zoning?
• Dwelling: How old is the house? How large is it in square metres? What is the architectural style? What’s the construction standard? How many bedrooms, bathrooms, kitchens, living spaces, laundries, car spaces etc? What’s the current condition? Does it need urgent repairs?
• Amenities and improvements: Does the house have a pool? A deck? A driveway? A garage? A shed? A landscaped garden? A gazebo? Other potential value-adding features and benefits? 
• Recent sales data: How much has the property been bought or sold for in the past? Are there other similar properties in the area that have been recently sold? How much did they sell for? What differences did they have from your house? How did these differences affect their sale prices?
• Environmental risks: Is the property located near the bush? A river? The ocean? Are there other factors that could put the property at risk of natural disasters?

What should you do before a valuation?

While you may not need to impress a professional property valuer in the same way as you’d want to for a potential buyer, there are still a few things you can do to help your property make a good impression, such as: 

• Presentation: While your home may not need to be picture-perfect such as for when it’s open for inspection, making sure it’s neat, tidy and uncluttered can make a valuer’s job a little easier.
• Keep up with ongoing maintenance: Fixing those sticking doors and torn carpets can help  show a valuer that the property is in good repair and well looked after. 
• Finish renovations: Half painted walls or incomplete kitchens or bathrooms could affect a valuation, as the valuer is obliged to consider the property “as is”, rather than how it may turn out when the work is complete.
• Consider the kerb appeal: Some valuers may not need to enter your home to conduct a valuation, but may instead just look at your property from the street outside. To help make sure that the exterior of your property is looking as tidy as the interior, look into doing the mowing and the gardening, and fixing those fences and gutters.

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