What is a property appraisal?
A property appraisal is essentially an estimate of your home’s value conducted by a real estate agent. Agents will compare your property with others in the area by looking at recent sales data and features in your home to give you an insight into how much your property could sell for. Think of an appraisal as a guide figure, carried out by someone with a lot of local real estate knowledge.
Most real estate agencies offer a free property appraisal service. This is useful to get in case you’re planning on selling your property soon as it’s nice to know how much you might get. However, it’s important to stress that a property appraisal is just an estimate — they’re not definitive and have no legal standing.
Try our property report tool to get a free estimate of your home’s value.
Why would I need a property appraisal?
A property appraisal can provide you with a solid indication of just how much your property could sell for. This can help get you started in your search for a new home.
When getting your property appraised, it’s important to find a local real estate agent who has a lot of knowledge of the local area and recent sales. If you use a real estate agent who typically works in another area, they may give you an unrealistic estimate.
What is a property valuation?
If you want to know exactly what your property is worth, you’ll have to get a formal property valuation report. A specially trained, qualified valuer will come to your home and complete the complex task of assessing your property. They consider multiple factors, including:
Location
Land and dwelling size
Topography, aspect and layout
Home features (e.g. pool, updated kitchen, number of bedrooms)
Building condition and structure
Council zoning
Heritage status
Damage and faults
Planning restrictions
Caveats or encumbrances
Ease of access to the property
Contrary to property appraisals, a valuation won’t account for stylish features and street appeal. Something that is important to remember when carrying out renovations is that the price you pay to renovate won’t necessarily be reflected in the home’s value.
For example, if you spend $20,000 renovating a bathroom, it doesn’t mean that your home’s value will automatically increase by a minimum of $20,000. Just because your property has a shiny new bathroom, it doesn’t mean that buyers would choose yours over a cheaper, almost identical property down the street which has an older bathroom.
Property valuations don’t dictate how much a property will sell for. Homes can sell significantly above or below their market value based on interest, emotions and competition (or lack thereof).
Why would you need a property valuation?
There are a range of situations for when getting a property valuation is necessary. These may include:
Property settlement
Getting a home loan (including refinancing and equity loans)
Formally calculating the equity of a property
Proving the value of a deceased estate
In dispute resolution
You can also get a property valuation at any time, if you are curious about your home’s value and want an accurate figure.
How much does a property valuation cost?
A property valuation can cost between $300 and $600, but it will depend on your location, property size and other factors. If you are in a very rural area, it will often be more expensive to factor in the inconvenience of the valuer travelling. On the other hand, a property appraisal will usually be free.
Many lenders will cover the cost of the property valuation if you are refinancing or applying for a home loan.
Who can provide a property appraisal?
Since property appraisals are estimates, they are often conducted for free by real estate agents. For an instant look at how much your property could be worth, you can use an online tool to get an estimate.
Who can provide a property valuation?
A property valuation can only be carried out by a professional, qualified valuer who has undertaken the education and training to provide an accurate written report. A valuer will usually work independently, but often on behalf of banks and lenders.
Are home appraisals accurate?
Home appraisals can be accurate, but often they are a little off the mark. Some real estate agents may appraise a property more generously to encourage a potential vendor to list the property through that agent.
Ultimately, the property market can be unpredictable. A home could sell for more than its appraised value if there is unexpected interest in it, and potential buyers are willing to stretch their budgets. The opposite can also be true. If a listed property is not getting much interest, you may be forced to accept a lower offer in order to sell.
In a way, it can be helpful to view a property’s value as how much someone is willing to pay for it. An appraisal or professional valuation may not mean too much to you as a vendor if you are only receiving low-ball offers below these numbers.
What’s the difference between a property appraisal and a valuation?
Check out our table summarising the differences between a property appraisal and a valuation:
Property appraisal | Property valuation |
|---|---|
An estimate of your property’s worth based on recent local sales, home features | A detailed report of a property’s value in the current market |
Usually conducted by a real estate agent | Conducted by a qualified valuer |
Typically requested by potential vendors to get an insight into their home’s position in the local property market | Typically required for property settlements, securing finance from a lender, calculating equity and in deceased estates |
Will usually come at no cost | Usually costs between $300-$600 but may be covered in some circumstances by mortgage lenders |
Appraised value will not always be reflected in the property sale price or valuation | The official property value may not be reflected in the sale price |
No legal standing with no guaranteed accuracy and should be treated as a guide for pricing | Can have legal standing |
How to increase property value
There’s a lot of factors that you won’t be able to alter. Things like location, heritage status and land size are (for the most part) fixed. But, you do have control over the property’s presentation and possible improvements.
Here are some tips for increasing your property’s value:
Make changes to your property that make sense for its location. For example, installing a pool may not give you the same return in cold Tasmania as it would in humid Darwin.
It’s not always a good idea to overspend in renovations when you are planning to sell soon. Potential buyers may not care that your kitchen renovation cost $70,000 when the house next door is also on the market with a nice kitchen they renovated for $30,000.
Think about whether you could extend your property by adding an extra room or storey.
Consider reconfiguring the floor plan if the current one is cramped and outdated.
Street appeal doesn’t matter that much in an official property valuation, but it can bring buyers to your doorstep.
You don’t always have to spend a lot of money to make your property more appealing. Consider replacing carpets, bathroom tiles and painting walls to freshen up the place.
Faults and damage can lower your property’s value. Consider getting these issues repaired, even if they don’t have much of an impact on your daily life.