5 August 2015
Property Valuation Vs Appraisal
When you want to sell your property you are likely to come across two terms – Valuation and Appraisal.
Whilst the outcome is similar, there is difference between valuation and appraisal.
By way of formal valuation, the actual value of the property can be determined. An appraisal is only an informal estimation of the price of the property based on knowledge of the local market and recent sale prices. Appraisal has no legal value whereas the valuation report is a legally valid document. Appraisals enable the buyers and sellers to get a feeling of the market. Valuation of a property is a complicated task and requires more time.
What is formal valuation report and when it is required?
Property valuation is a systematic process and the valuation report provides the actual value of the property. The valuation report is an independent as well as impartial point of view.
Only a trained and certified valuer is authorized to conduct formal valuation of a property. For the valuation of a property the valuer has to take in to consideration various aspects of the property such as: its location, nature and condition of the structure, various features of the building, defects of the building, details of encumbrances and caveats, local zoning and all other features of the building/property. The valuer will prepare a written report the client and usually receives a fee for preparing this formal valuation report.
Valuations are usually required during situations in which a definitive value of the property is required such as an order from the Court to resolve a dispute, for property settlements, for deciding the value of a deceased estate and for obtaining loan from a financial institution.
Appraisals are only opinions
Property appraisals are normally obtained from the real estate salespeople. The prices mentioned in appraisals are not definitive and are normally prepared without charging any fee.
An experienced real estate agent who is well familiar with the local area will give an insight into the exact market conditions and whilst appraisals are opinions with no legal standing it will act as a good guide in deciding the selling price of the property.
An appraisal is usually based on current market conditions and the final price is actually taken from the buyers in the market place who agree on a price that they are will to purchase for.
If you are unsure on which way to go, contact your local Raine & Horne agent for a free appraisal and if they feel you may need a formal valuation, they can point you in the right direction.
CEO - Raine & Horne SA