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Knowing a property’s value is essential when you’re buying or selling a home, or if you’re thinking of refinancing your loan. In this guide, you’ll have the answers to questions you’ve always wondered like ‘what’s the difference between a property valuation and appraisal?’, ‘what is a property appraisal?’, ‘how much is my house worth?’, and other burning questions!
Property valuation identifies the value of the property based on factors such as location, condition, and amenities. It is the definitive value of a property and property valuation reports are legally binding documents. Property valuations are done by qualified and certified property valuers.
Always check if a property valuer is a Certified Practising Valuer (CPV) or if they’re a member of the Australian Property Institute. These property values can work for lenders or be independent contractors.
Getting a property valuation is standard procedure when you’re applying for a new loan or want to refinance your current one. Lenders may also perform their own valuations of the property called lender valuation.
If you’re a buyer, knowing a property’s exact value will give you a much better idea on how much your lender will let you borrow. Plus, getting a property valuation can help you negotiate for a better price and make sure you've insured your home properly.
A formal property valuation takes into consideration these key factors:
A property valuer will take all of these into consideration and create a formal property valuation report with their official findings.
A property appraisal is an estimate of a property’s value done by a real estate agent. A real estate agent will conduct a property appraisal by comparing a property with similar properties in the area. Real estate agents will consider recent sales data of the past 90 days which includes how much properties sold for, the price range of properties available on the market, and a property’s features.
For property appraisals, it is essential that the real estate agent conducting it has in depth knowledge of the locale. With the right property appraisal, sellers could have a good idea on how much their property is worth.
Both property appraisals and valuations look at a property’s value. However, they are two very different things. The value from your property appraisal may not match your property valuation because they calculate the value of a home in different ways.
A property appraisal is usually done for free by real estate agents as part of their services. An appraisal isn’t legally binding and only provides a snapshot of the local market. When conducting property appraisals real estate agents take into consideration buyer demand, market trends, and street appeal.
You can request your local real estate agent for a property appraisal if:
Meanwhile, a property valuation is legally binding and provides a conclusive value of the property. A property valuation report is a much more formal document that takes into consideration various tangible factors that determine the value of a property. Property valuers don’t consider buyer demand or the state of the real estate market.
You may need to get a property valuation when:
Property valuations and property appraisals each serve a different purpose. Finding the right value of a property can be a challenge. If you’re looking at a place to start, download a property report to know more about properties that you’re interested in.
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