Why bother with valuation?
Valuations are used for various purposes. The most common basis for a valuation is for rating and taxing purposes, usually required every two years. This allows your local government to assess your council rates based on the value of the property. These figures are also used by state governments for land tax calculations.
In addition, banks and lenders require a valuation when a customer applies for mortgage finance. The lender will usually have an independent valuation carried out on the property to determine the value of their security equity in a property.
Nearly every lender in Australia instructs the valuer to assess the property using the definition outlined above. Another common misconception is that a valuation for bank purposes is discounted in some way. This is not the case.
Other forms of valuations include those used in property disputes such as matrimonial separation; insurance valuations; rental valuations when there is a dispute between landlord and tenants; and for resumption and compensation purposes when a government authority takes possession of a property.
Recently we are seeing more buyers and sellers of property privately engaging a valuer to assist them in making property decisions. Vendors are using the valuation as a decision-making tool, particularly if they have had wide-ranging variances in appraisals conducted by agents. They are then able to assess whether an offer made is genuine, above or below where it should be.
Alternatively, purchasers may also choose to engage a valuer to assist them when they are making an offer. In these days of tight lending rules, many just want the assurance that the price they pay will be supported by the bank when they have it valued. If you get a firm opinion from a valuer you should consider it, as it will be based on a close and educated knowledge of the local market.