Having enough funds to invest in your next property can sometimes be in the hands of a valuer. Discover how to prepare for the best possible valuation result.
First off, it’s important to understand that a valuation is not the same as an appraisal from a real estate agent. An agent will give you their best estimate of what price your property could fetch if you were to sell. A valuation from a licensed valuer is about how much your property is worth as an asset. It’s going to include information about location, land size, construction, dimensions, condition, access and any improvements that have been made. It also highlights comparative sales in the local area plus council zoning and planning restrictions that apply.
Any lender is going to order a valuation when they’re looking at securing a mortgage on a property you own to help you buy a second one. If the valuation is lower than you were expecting (ahem!), your plans to climb the investment property ladder can start to look shaky.
So just what are valuers looking at when they come up with that all-important figure for the banks? And what can you do to influence the outcome?
Of course there’s nothing you can do to change the location of your property once you’ve bought it. But if you’re planning to carry out improvements or renovations, it’s essential to know how they could affect a valuation outcome.
It might seem like a great idea to put up partition walls to create extra rooms. The more bedrooms your property has, the more rent you can charge. And it can only add to the property’s value right? Well, not necessarily. Both renters and owner occupiers are looking for generous sized bedrooms with built-in storage, not a shoebox where there’s barely enough space for a double bed.
So, by all means add more bedrooms if you can do so without making them uncomfortably small.
A garage or covered area for parking is generally listed separately in a valuer’s report, as are outdoor areas. So if you have the budget for modest outdoor improvements like a carport or new deck and awning, it could make a positive difference to your valuation. Just be sure you get the proper planning approvals for any renovations you carry out. This is important because a valuation report also highlights any improvements that may not be council approved, and this could count against you in the final tally.
It goes without saying that a neat and tidy property will make a better impression. If you have tenants, try to time the valuer’s visit with their next routine inspection so everything is in good order. Staying on top of repairs is important, too. Valuers are tasked with noting any essential repairs, particularly those that could have an impact on structural integrity.
To determine a fair value for your property based on what’s happening in the local market, a valuer will include the latest sales results for at least three similar properties in your area. So keeping an eye on local sales and timing your valuation accordingly can affect the outcome too.
Finally, it’s important to make an appearance when the valuer comes calling. It gives you the chance to highlight your property’s best features and answer any questions. If you can’t be there in person, your property manager can act on your behalf. Just make sure you brief them beforehand.
Have you had a good or bad experience with a property valuation? Tell us about your experience in the comments below.