Australians love to talk about real estate, but there’s a lot more to calculating the true value of one’s residential or commercial property than meets the eye.
There are two ways to understand the value of your home or commercial property: a property valuation and a real estate appraisal.
There are numerous differences between them, but the main difference is that Certified Practising Valuers conduct valuations, while real estate agents provide appraisals.
Becoming a Certified Practising Valuer is a rigorous process, with some states having their own laws and requirements. For example, a Certified Practising Valuer typically needs to complete a university degree, undertake supervised practical experience, pass a professional interview, complete ongoing professional development and satisfy other requirements.
Learn more: What is a property valuer?
Here are five important differences between a property valuation and a real estate appraisal:
1. What you receive with a valuation vs an appraisal
A valuation and an appraisal are different documents and will share different information about your residential or commercial property. A valuation will provide you with an impartial and detailed valuation report based on a range of elements and comparable properties’ values, while an appraisal will give you an estimate of your property’s value based on its features and recent sales.
2. How your property value is calculated in a valuation vs an appraisal
A property valuation must be conducted by a Certified Practising Valuer, who will diligently consider many factors including the location, land and building size, and the condition of your property. They will assess risk ratings such as environmental risks and market risks, as well as local government and planning restrictions. A valuer will also look at comparable property sales to provide you with a formal and independent assessment of your property’s value, whether it’s a residential or commercial property. For an appraisal, a real estate agent will look at a range of your property’s features and will use their knowledge of the local market to give you an estimate or opinion of what it could sell for.
3. When you need a valuation vs an appraisal
There are various situations when you will need a property valuation rather than a real estate appraisal. For example, you might need a property valuation for settlement, getting a property loan or refinancing. Property valuations are also used in calculating equity, deceased estates and dispute resolution. On the other hand, a real estate appraisal will give you a strong idea about how much your property could sell for in the current market.
4. The legal standing of a valuation vs an appraisal
A property valuation conducted by a Certified Practising Valuer is an official legal document that can be used in court and other institutions, while an appraisal is an opinion or estimate of a property’s value. This is why valuations may be required in situations like deceased estates and dispute resolutions.
5. The cost of a valuation vs an appraisal
A property valuation conducted by a Certified Practising Valuer will come at a cost depending on a variety of factors including whether it’s a residential or commercial property. Sometimes a mortgage lender will cover the cost of a property valuation. A real estate appraisal is usually free, as they are looking to list and sell your property.
If you need a property valuation, Find A Property Professional here.