How much is my investment property worth?
What you need to know about the property valuation process.
Property valuations are a key part of the property buying process. Find out about the different types of valuations, what’s involved and how to prepare for your valuation.
What is a property valuation?
A property valuation is the process of establishing the value of an asset or liability. It is arranged by your lender to help them confirm that the value of your property is sufficient to support your loan application.
When and why you’d need a property valuation
A property valuation is usually required when you purchase a home, refinance for a renovation or want to release equity in your property or even when you are selling (so you know what your property is worth).
A property valuation acts as a safety net for your lender so they don’t lend you more than your property’s worth. It can also give you an indication of the value of the asset you own or are about to purchase.
Types of property valuations
There are different ways of doing property valuations. Four common types of valuations include:
- Automated Valuation Model (AVM) - This is a computer generated estimate of the value of a property based on a range of data attributes.
- Desktop - The valuer assesses the property from their desk using online property data. This type of valuation is a quick way of estimating the market price of your property and getting a general idea of what it is worth. A desktop valuation may not be detailed enough for lender to make a decision on your loan application.
- Kerbside - The valuer does the valuation from their car while parked outside the property. The valuer will sight the property from the outside but will not actually get access to the inside of the property.
- Full valuation - The valuer gets access to the property and does a walk-through of the property in person.
What does a valuer look for?
Valuers take into consideration a wide range of features when they assess a property. This could include:
- Location of the property, planning restrictions and local council zoning
- Size of the property including number of rooms
- Fixtures and fittings
- Building structure and condition of the building
- Overall presentation and fit-out
- Ease of access to the property - does it have good vehicle access and a garage
- Recent sales in the area and other market conditions
How often should you get your investment property valued?
If you’re curious and interested in keeping an eye on how the property market is moving, you can get price estimates on your property as often as you want to satisfy your curiosity.
There are a number of online reports and apps available that are designed to give you a quick idea on what your property is worth. Aussie mortgage brokers are also able to give you a free property market report.
Another option is to get an appraisal from a real estate agent. This is usually organised if you’re thinking of selling in the near future and want to get a price guide to help you decide whether to sell or hold.
Full valuations for the purpose of changing your mortgage are only needed when you’re looking to get a new loan or change your existing loan. For example, if you’re refinancing your investment loan because you want to release some equity, your home loan lender is likely to require a valuation.
If you’re interested in talking to a broker and getting access to a free RP Data Property Report, book an appointment today.
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- Chapter One : Things to consider before investing in property
- Chapter Two : Determining where to invest
- Chapter Three : Investment Properties by Dwelling Types
- Chapter Four : Finance for Your Investment Property Purchase
- Chapter Five : How to Invest in Property
- Chapter Six : Adding Value to Your Investment Property
- Chapter Seven : Positive and Negative Gearing
- Chapter Eight : Getting Your loan
- Chapter Nine : Selling your Investment Property