Assessing the real worth of the property is more complicated than you can imagine. Although real estate agents can give you a rough estimate, a property appraisal doesn't always match the valuation report. The price quote can be thousands of dollars higher than the definitive value of the property. Valuation, after all, isn't the same thing as property appraisal. Here's why.
A property appraisal does not indicate a definitive value but a rough figure given by the agent or real estate professional. The usual basis for the quote is the recent sales data and the prices of similar properties in the local area. The agent comes up with the estimate based on his or her knowledge of the area and familiarity with the local market. A property appraisal is just an estimate, based on the opinion and impression of an experienced real estate professional. Since this is not a formal assessment of the property's worth, the quote shouldn't be taken as an actual real estate value. This should serve more as a guide or should be considered as a way to determine a possible price range.
Why you should ask for a property appraisal?
Although owners and sellers don't get a definitive value of the property through an appraisal, a qualified real estate agent or professional can at least give them an idea how much the property would sell in the current real estate market. Through the estimated value or price, they can get a feel for the local market and have a good look at a possible return on investment or profit margin. The property should be appraised by a qualified real estate agent that's familiar with the neighborhood or local area. This agent can give sellers a more valid appraisal because of his or her experience in the local market, taking advantage of his or her connections and expertise. Appraisals and second opinions from other real estate professionals will also help. Usually, the appraisal doesn't require any fee, especially if the seller will be working closely with the agent.
A property valuation determines the exact price or value of the property through a formal process. The valuer must have the training and education in the field to provide a qualified assessment based on the property's various features. Aside from location, physical attributes and other features are taken into consideration to ascertain the definitive value of the property. Factors considered in the valuation include the building structure and condition, accessibility (public transport, parking, etc.), local council zoning, special features such as fittings, building plans and limitations, and structural faults and caveats on the property. A fee is charged for the valuation, which comes with a written report that discusses in detail how and why the property value was derived.
Why you need a property valuation?
The formal and complex process involved in a property valuation makes it a good basis for property settlement and for resolving a dispute in court. This can also be a good ground for establishing the value of a deceased state and for asset accounting and management. Banks and other lending institutions may also rely on a property valuation when approving loans for property purchases or for refinancing.