Simply put, a property valuation involves a formal process and may be legally binding, where an appraisal is informal and not legally binding.
An appraisal is a price estimate usually given by a real estate agent, who uses their knowledge of the area and recent sales, as a guide for the price estimate of the property.
A formal property valuation differs in that it determines the actual value of a property, from an impartial and independent point of view.
In most states, a formal valuation can only be provided by a qualified valuer, with the necessary credentials and a written report is provided and a fee charged.
Property valuations are required in the cases of:
- Property settlement
- Dispute resolution
- Deceased estate
- Asset accounting and management
- Obtaining finance
- Refinancing or equity draw down
Valuers must take the following into consideration when valuing property:
- Physical location
- Building structure
- Building condition/structural faults
- Presentation (fittings included)
- Access (vehicle, pedestrian, off-street)
- Special features
- Planning restrictions
- Local council zoning
- Caveats or encumbrances
The valuer will then combine all of this information with data about comparable sales recently made in the area, as well as market conditions, to arrive at what is referred to as the “true” value of the property.
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