If you are selling your property, getting to estimate its worth can be quite complex and confusing. However, the truth is that property valuation is a concept that is easy to understand what property valuation entails and why it is important to both the buyer and the seller.
For starters, property valuation is a general assessment of a property to determine its monetary worth. Thus, the valuation figure is arrived at after taking into account various assumptions, factors that have an impact on the projected market, rental value or capital as well as the prevailing market conditions. Thus, valuation is the best way to determine how much your property is worth especially if you are needing to sell your house quickly.
Why Valuation Figures Differ
It is important to understand that valuation is not a science. In fact, a formal valuation can be said to be an opinion that is formed based on evidence, usually comparative market data relating to the sale of property within the areas and other detailed inspection.
Thus, the surveyor will carry out an inspection of all the rooms as well as the area surrounding your property with the aim of assessing the unique characteristics that make up the value of the property. Notes, photographs as well as detailed measurements are recorded for reference when forming a conclusion in the value of the property.
Being that the valuation is based on opinion, an element of subjectivity cannot be ruled out. Thus, you will do well to get multiple valuation reports from different estate agents and probably a property surveyor from which you can draw a conclusion. Generally, the valuation reports should fall within a close range with that done by the Royal Institution of Chartered Surveyors (RICS) that are governed by strict professional procedures and rules.
What if the sale price does not match the valuation?
It is common to find cases where the sale price and the valuation are different. This can be attributed to a number of reasons. First, estate agents may generate unrealistic estimations of the worth of the property resulting in an exaggerated asking price that will turn off prospective buyers. The result of this is that your property will stay on the market for long before you eventually reduce the price and sell it at a loss.
Secondly, buyers may be disappointed if they formal valuation of a property they intend to acquire does not meet the price they are prepared to pay for that property. Thus, when a valuation is requested for purposes of secured lending like mortgages, valuers are keen on satisfying the lender so that the loan that is requested against property is in line with the value they are lending against.
This way, they will not lend more than the value of the property effectively preventing possible financial loss in the event of repossession or sale of the property to recover an outstanding loan where the borrower has defaulted.
Thirdly, before putting property up for sale on the property market, estate agents conduct an appraisal for the seller that forms a basis for the selling price. This sets out what a potential buyer is willing to pay even though it may not be the actual worth of the property.
Property appraisals by estate agents are not valuations hence should not be used to assess the lender loan security. In fact, it is only a formal valuation report from registered valuer that is admissible as it takes into account detailed evidence of both property and comparable market factors.
Finally, a number of factors that include personal preferences, market demand and the buyer’s emotions may sway sale prices.
Due to all these reasons, the estate agent appraisals and the sale price may not be a true representation of the value of the property hence may not be relied upon by the buyer, seller or lender when determining the actual value of property.
Why you need to use a Registered Valuer
While it is true that estate agents will carry out property appraisals at no fee, you might end up in massive losses as their primary interest is getting business from you. Thus, you will do well to consider engaging a registered valuer to tell you the value of your property.
Registered valuers are under obligation to abide by the strict professional guidelines that include providing adequate professional indemnity insurance. In addition, they should also be able to defend the market evidence they applied in the report to arrive at the final valuation in the event that a claim is made against them.
Thus, you can be confident that opinion of the valuation provided may be relied upon subject to qualifications within the valuation document.
In conclusion, lenders, purchasers, insurers as well as sellers may instruct independent registered valuers with confident as they are bound to provide a valuation that is reliable, accurate and honest.