Whether you plan to buy a commercial property or sell your home, an up-to-date property valuation is a crucial first step. Knowing the real value of the property helps you determine if it is a good investment. It also gives you an edge when negotiating a better price. Likewise, if you’re selling, it ensures you set a competitive price that can attract potential buyers.

If you’re considering buying or selling a property, continue reading to learn about the essential things you should know before getting a valuation.

What is a property valuation?

A property valuation is an assessment of the value of a property as if it were for sale in today’s market. Accredited property valuers carry out this process and provide a comprehensive property report after careful analysis and consideration.

Valuations consider key factors such as location, land size, aspect, condition, and current market trends, which we’ll explore further below. With an up-to-date property valuation, buyers, sellers, and investors gain deeper insights into the property they’re interested in, supporting better decision-making.

Why property valuation is essential

In today’s challenging economic conditions—with rising inflation and interest rates—having a current valuation for property you want to buy or sell is vital for managing your financial portfolio effectively. Beyond just knowing how much your property is worth, a valuation report informs you of the potential risks and opportunities associated with the property.

While online free property reports can offer quick estimates, they often lack the depth and accuracy needed for critical financial decisions. 

To gain a more precise understanding of your property’s worth, here are 5 key things you should know before getting a professional property valuation.

5 Things You Should Know Before You Get a Property Valuation

1. A property appraisal and a property valuation are not the same

It’s important to understand the differences between a property appraisal and a property valuation. While both aim to estimate the market value of a property, an appraisal offers an informal and rough estimate, often provided by real estate agents to help owners get an idea of their property’s worth in the current market.

On the other hand, a property valuation is a formal and accurate analysis that considers all the key aspects affecting a property’s market value, provided in an unbiased and detailed report and supported by market evidence. Highly trained and accredited valuers conduct valuations to assist buyers, owners, and investors make well-informed real estate decisions.

Another key difference is that a valuation is a legally binding document that can be used in court, whereas an appraisal is not. For instance, when reporting the market value of your assets as part of tax compliance requirements, a valuation report is a necessary supporting document (Australian Taxation Office, 2024).

Understanding the legal implication of valuing your property sets the stage for the next crucial aspect—knowing the purpose behind your valuation.

2. Understanding the purpose of your valuation

The purpose behind your property valuation is crucial, as it guides the approach a professional valuer will take. Valuation serves multiple important purposes, including:

• Buying or selling property: Helps determine a fair market value, ensuring you don’t overpay or undersell.
• Securing financing: Lenders require a valuation to assess the risk involved in granting a mortgage or loan
• Investment analysis: Investors use valuations to determine potential returns on property investments
• Taxation and Financial reporting: Tax authorities require this to determine property values for tax calculations and the accurate representation of property assets on balance sheets
• Insurance and Risk management: Determines the appropriate level of insurance coverage
• Legal purposes and Estate planning: Essential for asset division in cases like divorce, inheritance or probate purposes.
• Compulsory acquisition and compensation: Determines compensation claimed on cases of property acquisition by government departments.
• Development and Redevelopment: Helps developers assess potential property values pre and post-development

Knowing the purpose behind your valuation helps ensure that the right approach is taken and that you receive the most accurate and relevant insights for your needs.  

3. Partnering with a certified and experienced property valuer

When it comes to valuing your property, partnering with a registered valuer is not just a smart choice—it’s essential. Certified valuers stand by professional standards and ethical guidelines, ensuring the valuation process is thorough, unbiased, and accurate. Their certification guarantees they are qualified and undertake ongoing specialised training and possess the necessary qualifications to perform valuations that meet the highest standard.

Working with a valuer who has local expertise and specialised knowledge can make all the difference. Property markets differ by region, so knowing local factors is important for accurate property valuations. An accredited valuer familiar with the local market will consider factors like neighbourhood trends, local market conditions, and zoning regulations. By taking into account all relevant factors, it leads to a valuation you can trust.

The expertise of a professional valuer is invaluable when considering the key factors that influence a property valuation.

4. Key factors that influence property valuation

There are several key factors that can greatly impact how a property is valued. Let’s dive into these critical aspects that play a pivotal role in determining property worth:

• Market trends: The overall economic conditions strongly influence property demand and pricing. When the market is strong, property values tend to rise, whereas during economic downturns, they may decline.
• Location: The location of a property is one of the greatest determinants of its value. Properties in high-demand areas, especially those close to schools, public transportation, and shopping centres, generally have higher prices.
• Property condition: The physical state of a property also affects its valuation. Homes that are well-maintained usually attract higher values than those that require significant repairs or renovations.
• Unique features: Special features can add considerable value to a property. Additions such as a swimming pool, spacious garden, or energy-efficient upgrades not only enhance the property’s appeal and increase its market value.
• Statutory Constraints:  Council and government guidelines such as zoning and other requirements can affect the current and alternative potential uses of the land which in turn affects the market value.

These factors combine to provide an accurate estimate of a property’s worth, considering market conditions and physical qualities.

5. Regulatory requirements when submitting your valuation report

When you submit a property valuation report, it needs to meet regulatory standards to be considered valid. This is especially important for SMSF or tax purposes. It’s not just a simple assessment, but a necessary compliance requirement. The Australian Taxation Office (ATO) imposes strict guidelines for valuations to ensure they are accurate and reflective of current market conditions.

For instance, for SMSF properties, the ATO requires a market valuation to be submitted at regular intervals which can range from 1 to 3 years. This requirement is vital for accurate financial reporting and not complying with these standards can lead to penalties. Given these strict requirements, it’s essential to connect with a qualified valuer who is knowledgeable about these regulatory requirements.

Understanding these requirements allows you to confidently rely on your valuation report for legal, financial, or tax-related purposes.

Conclusion

In summary, getting a professional valuation is essential for making informed real estate decisions. By knowing the essential things to look out for before getting a property valuation, you can navigate the property market with confidence.

Don’t overlook the importance of partnering with a certified valuer who brings local expertise and a thorough approach to the table. With accurate and up-to-date valuations, you can make well-informed decisions that align with your financial goals.

Ready to get a comprehensive property valuation?

Contact our expert team today to ensure you have the accurate insights for your next real estate decision.