What Are The Four Main Types Of Bank Valuation?
Dilleen Property Group 2023
When it comes to assessing the value of a property, not all valuations are created equal. Different lenders may use different types of valuations to evaluate the worth of your property, and each valuation can yield different results. As a property owner, understanding the various types of bank valuations available to you can help you make informed decisions about your property, such as extracting capital or seeking refinancing options. However, it's important to note that larger banks typically offer more valuation types than smaller banks due to their higher capital and risk tolerance.
In this blog, we'll discuss the FOUR main types of bank valuations and how they can impact the value of your property:
Full Valuation: Full valuations requires a specialist valuer to physically inspect your property and create a legally binding report. During the inspection, the valuer will inspect the external and internal conditions of the property. This includes the features of the property such as the number of rooms it has, the quality of the build and the material in the property and whether or not there were any renovations made. The valuer will also take into account the market data, comparable sales and location. A benefit of using a full valuation is that it provides a very accurate analysis of the property, however, it may be a more conservative way of valuation as it takes into account all the minor details. Full valuations will positively reflect properties with outstanding features and internal fixtures, however, if your property is old and requires maintenance, the full valuation method will lower the property’s worth.
Kerbside Valuation: Kerbside valuation (also known as Drive-by valuation) is a more casual valuation method where the property valuer inspects the exterior of the property only. This type of valuation is quicker than a full valuation and takes into account the exterior presentation, surrounding neighbourhood and location. Other contributing factors such as market trends, local property listings and comparable sales are also considered. Kerbside valuations can benefit older properties with less appealing interior set-ups, however, this valuation type is becoming less commonly used due to stricter regulations from lenders.
Desktop Valuation: Desktop valuations are performed remotely by using the public information available about your property. A certified valuer will look into information such as the land size, year of construction, the number of rooms in the property, the location and current market trends. Desktop valuations are more suitable for properties sold within the past 10 years with minimal changes made. For properties sold more than 20 years ago or have been recently renovated or subdivided, a desktop valuation will not reflect these changes in the calculated value.
Automated valuation report: Automated valuation report (also known as automated valuation model) is a valuation tool that uses statistics to get an instant property value. It is an algorithm that uses real-time proprietary data such as sales figures and property data to estimate a value. The analysis also takes into account recent comparable sales sold in surrounding locations and properties with similar attributes. If the property owner provides an estimated value within the range of value provided by the algorithm, the value will be accepted. This is one of the most lenient valuation methods as it is instant and does not require a physical examination of the property.
Conclusion: In conclusion, bank valuations are critical when it comes to extracting capital from your existing property or obtaining refinance. By choosing the right valuation method, you can gain an advantage and make informed decisions regarding your property investments. If you’re looking to obtain refinance or extract equity from your property, 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.
