While selling or buying Melbourne property you’ll need to call on the advice of several experts. Property valuations and a market appraisals are both important to help you make the right decisions, and while they may sound like the same thing they’re distinctly different.
To help you get the expert advice you need we’ve cleared up the difference between a property valuation and an appraisal.
What is a market appraisal?
When you ask a real estate agent what your property is worth they’ll provide you with a market appraisal. This figure is the agent’s expert opinion of what they would be able to sell your property for if you listed it with them.
The number they give you will be calculated using the agent’s knowledge of the market in the area, including consideration of:
- Recent sales of similar properties.
- Demand for property in the area.
- The direction in which prices are heading.
- The agent’s expert opinion on how buyers will react to your home.
Appraisals are intended only as a guide or estimate of how much you may be able to sell for and have no legal standing. They are usually fairly casual and are useful to help sellers get an idea of what they could get if they put their property on the market.
How about a property valuation?
Property valuation is a term that’s used rather loosely and can refer to informal appraisals and estimates. However, the most common use of the phrase refers to a formal process whereby a qualified profession will provide a detailed report including the estimated value of a property, as well as the reasoning behind that value.
To decide on this figure a valuer will consider the property’s
- Location and aspect.
- Building structure and condition.
- Features of the home.
- Land size and quality, and more.
Formal valuations are usually requested by banks and lenders before they approve a mortgage to buy a new home, or refinance your current mortgage. They do this to ensure that if you default on your loan they have adequate security to recoup their losses and for that reason they’re often lower, or more conservative than market appraisals.
If you’re unsure whether you need a formal property valuation or a market appraisal, remember as a rule of thumb: if you’re selling you need an appraisal, if you’re buying you may need a valuation. For a no obligation appraisal of your property get in touch with the team at Brad Teal today.