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Property valuation is one of the most significant factors in the equation when investor wants to acquire property. But can we all trust it?
It’s would be fantastic if we could take exactly what the professional valuer states as the truth and not have to worry about anything. Here we would like to bring up an example which might suggest that valuations can’t always give you 100% reliability and they depend on many factors. No matter how good your valuers are.
Michael Bowling, a famous co-founder of Allied Investment Group wrote about one of his clients who bought a property in an area to be considered a great investment. To his surprise, the valuation for the property fell short of the purchase price. The client then requested a couple of other valuations and all of them didn’t go well. Just to mention, all of these valuations were requested for the purpose of “mortgage security"
How to explain the difference in the property valuations?
Valuations are often adjusted looking "backward”: the values check historic comparable sales personally chosen by them. The valuation sometimes doesn't take into account future demand.
2. Lenders often influence the valuation; they provide the valuation criteria, which can affect the valuation and valuers have to stick to them.
3. With limited comparable sales in certain, especially newly build suburbs, valuers have to use personal judgement, so an objective process became somewhat subjective.
4. Valuers are human and when provided with limited data, they tend to be conservative.
That's why it's important to make sure you provide the valuer with all the information needed.
Property valuations are very important but they’re only one of the factors when it comes to properties with strong growth potential. If you’re looking to acquire a property, consider areas with:
* Strong, solid demand and supply fundamentals
* Good employment prospects nearby
* Good rental yield
To ensure your real estate is valued at its right price, always choose trusted, certified property valuers in Sydney, such as IP Valuations.