By AskTheValuer
10/03/2012 A
Property Valuer is Used in Loan Applications, Home Buying / Home Selling,
Transferring Property, Marriage Settlements, etc.
A
property valuer helps to establish a property's market value - the likely sales
price it would bring if offered in an open and competitive real estate
market.
Market
Value as defined by the International Valuation Standards Committee, and as
adopted by the Australian Property Institute, is...
“...the
estimated amount for which an asset should exchange on the date of valuation
between a willing buyer and a willing seller in an arm’s length transaction
after proper marketing, wherein the parties had each acted knowledgeably,
prudently and without compulsion”.
Your
lender will require a property valuation by a certified property valuer when you
ask to use a home or other property as security for a loan, because it wants to
make sure that the property will sell for at least the amount of money it is
lending.
Don't
confuse a comparative market analysis (or CMA) with a property valuation. Real
estate agents use CMAs to help home sellers determine a realistic asking price.
Experienced agents often come very close to a valuation figure with their CMAS,
but an property valuer's report is much more detailed, and is the only valuation
report a bank will consider when deciding whether or not to lend the
money.
When a Property Valuer
is Required?
A
valuation report by a property valuer will be required for transferring property
(stamp duty purposes). Example: between say, from parent to child / children,
individual to self-managed super fund (SMSF) or from individual to a
corporation.
When
a marriage breaks down both parties could choose to sell the marital home and
split the proceeds from the sale, or one party may want to buy the share of the
home from other party. In any case, a property valuer would be called upon to
provide an independent property valuation (sometimes also known as a sworn
valuation).
Experienced
property investors often use the services of a property valuer before making an
offer / bidding at auction for a property. The valuation figure in the property
valuation report provides a benchmark against which the prudent investor makes
his/her decisions.
Before
selling your home it is always a good idea to get a property valuation from
an independent property valuer to set your selling price. This could be used in
conjunction with a CMA or as a separate selling price indicator.
Whether
a property valuer is used for pre-purchase or pre-sale purposes, the few hundred
dollars invested could save you thousands, if not tens of thousands of
dollars.
Market Value vs
Price
It
is important to distinguish between Market
Value and Price.
A price obtained for a specific property under a specific transaction may or may
not represent that property's market value: special considerations may have been
present, such as a special relationship between the buyer and the seller, or
else the transaction may have been part of a larger set of transactions in which
the parties had engaged.
Another
possibility is that a special buyer may have been willing to pay a premium over
and above the market value, if his subjective valuation of the property (its
investment value for him) was higher than the Market Value. An example of this
would be the owner of an adjoining property who, by combining his own property
with the subject property, could thereby obtain economies-of-scale (i.e. 'sum is
greater than its parts'). When such situations arise in property markets, it is
the task of the property valuer to judge whether a specific price obtained under
a specific transaction is indicative of Market Value.