It can be very frustrating to have your home loan application knocked back or the loan amount reduced because the valuation came in too low. Here are a few ways in getting a good valuation.Investors frequently in Australia have their properties revalued in order to finance additional investments. For example, lets say your property’s value (equity) has gone up by $100,000. Most lenders will allow you to borrow around 80 per cent of that value (i.e. $80,000) which can be used as a deposit for another property purchase. In order to work out exactly how much lenders will give you, lenders will often send a valuer around to that property to assess the current value of the property. During valuations on my investment properties I have made it an objective to meet the valuer out at site and understand what he is doing. It is a good habit to get into as there are some things that you can highlight to the valuer (e.g clossness to public transportation) which can help with the valuation. Below are points from what industry experts such as Herron Todd White say on how to the get the highest property valuation.
Herron Todd White’s Phillip Grahame says, “The main things in a valuation are the size and functionality of the dwelling and the size and location of the land.” So obviously the chances of a favourable valuation mainly come down to your choice of property in the first place. And of course, it also depends on what the property market in general is doing at the time. Below are a number of things you can do to make sure you pull off the best valuation possible on the day:
1. Presentation
Presentation is the most important thing to take care of when you have an upcoming valuation. Ensure that the gardens are looking nice and the clutter throughout the house is cleaned up and all that sort of thing, because first impressions do count.
2. Recent sales evidence
If you know the sale prices achieved at any recent property sales in your area, have that information available for the property valuer.
3. A rates notice
From my own experience valuers like to see a copy of the property municipal/council rates. They varies from one place to the next, but there will generally be a “site value” or “unimproved land value” figure reflecting the value of the land only on the rate notice. And sometimes there will also be an “improved value”, based on the land and building. It gives the valuer a pretty good idea of where the property sitting in the marketplace for that area.
4. Outdoor living areas
Outdoor living areas tend to add more value than cost. So if there’s a well presented and functional living area, that always reflects well on a valuation.
5. Kitchen and bathroom
Kitchen and bathroom facilities help improve values. If they’re well presented and don’t have a dated look about them, then that will obviously have a positive impact on the valuation.
6. Make your improvements prior to the valuation
If you have home improvements to make, do them before the valuer comes around, as the improvements will help add value. However remember not to over capitalise on the improvements.
7. Clear instructions
If you’ve got plans for future improvements and got quotes and costings, make sure if you’re going through a lender that the lender requests an ‘as if complete’ valuation. This helps the valuer a lot as they have a true value on how much it each improvement cost.
8. List of recent improvements
If improvements have been made to the property over recent times, provide a detailed and written list of works conducted and the cost of these. Even better would be project specs and a building contract, giving the valuer an idea of exactly what has been spent.
9. Don’t over capitalise
As I said before improvements and renovations add value, but be careful about over capitalising. For example: Putting on a large extension will obviously increase the value of the property but it may not increase the value more than what it actually cost. As a benchmark have a look what at neighbouring properties and see what improvements have been done.
10. Kitchen and bathroom
Kitchen and bathroom facilities help improve values. If they’re well presented and don’t have a dated look about them, then that will obviously have a positive impact on the valuation.
11. Be patient
Lastly, don’t ask the valuer what they think it’s worth just as they’re leaving. After visiting the property, the valuer needs to go away and undertake at least two separate methods for determining the property’s value. Two of the most common methods for residential property are “direct comparison” and “summation”. Direct comparison involves analysing recent sales of similar properties in the area. It may be a straight comparison, or a comparison of the rate per square metre (which is the sales price of each property divided by the land size..m2). In this method the valuer takes into account factors which differentiate your property from those in the comparison sample, such as location, size, quality of the dwelling and views. Using the summation approach, the valuer assesses the land value (sometimes based on a comparison of vacant land sales), and then includes the “added value” of the improvements on the land (i.e. buildings). The added value is based on market evidence and is sometimes analysed on a rate per square metre (m2)basis. The valuer probably won’t be comfortable giving you an answer until this analysis is complete.
In summary...
So in helping you get an optimal valuation on your property, keep the place neat and tidy, provide any information (e.g. improvement quotes, council rates) to the valuer which might support your case in why, and then leave them in peace to get on with their job.
No comments:
Post a Comment