Dilleen Property Group 2023

Property valuation is a critical aspect of real estate, whether you're refinancing, selling, or simply curious about your property's current worth. In this blog, we'll explore various property valuation methods and help you understand how to choose the right one for your specific needs.

Understanding Different Valuation Methods

Property valuations come in various forms, each with its own set of advantages and considerations. Here's an overview of the most common types:

1. AVMs (Automated Valuation Models): AVMs are quick and digital. They provide instant property valuations based on market trends and data. However, they may not consider recent renovations or improvements to the property.

2. Desktop Valuations: These valuations are usually generated within one or two days and involve a computer assessment by a panel of valuers. They typically return the highest valuation for your property, making them an attractive option. However, while they consider market trends and external factors, they may not account for interior changes or upgrades.

3. Curbside Valuations: Similar to desktop valuations, these involve a valuer driving past your property to assess its external condition. They provide a quick evaluation but may not include interior details.

4. Short Form Valuations: These are more comprehensive than AVMs, desktop, or curbside valuations. They involve a detailed assessment of your property, taking into account interior and exterior factors.

5. Full Valuations: The most thorough method, full valuations requires a valuer to visit your property, inspect it thoroughly, and analyse various data and trends. These valuations are generally more conservative as valuers are personally liable for inaccuracies.

Choosing the Right Valuation Method

Selecting the right valuation method depends on your specific circumstances:

• AVMs: These are ideal if your property hasn't seen significant changes and you need a quick estimate.

• Desktop and Curbside Valuations: Suitable if you need a reasonably accurate estimate and can wait a day or two. Desktop Valuations often return higher values, and banks like CBA are known for offering such valuations.

• Short Form Valuations: Opt for this method if you've made interior and exterior improvements and want a more accurate valuation.

• Full Valuations: Choose this valuation for the most accurate assessment, especially if you've made substantial changes to your property.

A Real-Life Example

Let's delve into a real-life situation to better understand why selecting the right valuation method matters. Imagine a homeowner who wants to refinance their property. They approach three different banks for property valuations:

1. Bank A values the property at $900,000.

2. Bank B values it at $850,000.

3. Bank C, using an AVM, values it at $768,000.

Now, you might expect the homeowner to choose Bank A because it offers the highest valuation. However, the homeowner makes an interesting choice by going with Bank C. Why? It's because Bank C not only provides a reasonable valuation but also offers a cashback bonus and a more attractive interest rate.

This decision illustrates a crucial point: while a higher property valuation is appealing, it's equally important to consider the complete package a lender is offering. In this case, the homeowner doesn't require the full $900,000 but values the financial incentives and better interest rate offered by Bank C, making it the more attractive choice.

Conclusion:

When it comes to property valuations, one size does not fit all. Your choice of valuation method should align with your unique circumstances and goals. Whether you're refinancing, selling, or simply want to understand your property's worth, working with a knowledgeable expert can help you navigate the complexities of property valuation and make the best decision for your financial future. Remember, it's not just about the number; it's about what works best for you and your financial objectives. If you’re looking for experts to have a look at your finances for you, you can speak to our broker Justin Picker here. Furthermore, if you’re looking to build your own property portfolio or need help starting your property investing journey, feel free to contact us here to learn more about our services and investment strategy.

Disclaimer: This is not intended as legal, financial, or investment advice and should not be construed or relied on as such. Before making any commitment of a legal or financial nature, you should seek advice from a qualified and registered legal practitioner or financial or investment adviser.