With new suburbs in development, more and more Queenslanders are buying homes off-the-plan. That means that they are buying new homes that are not yet built. So how can you get a loan or value a residential property that does not quite exist yet? Well, the answer is an As-if Complete Valuation.
What is an as-if complete valuation?
An as-if complete valuation is the process of valuing a property that has not yet been constructed. It requires the valuer to make assumptions that are reasonable and based on objective evidence. In many cases, real estate valuers in Brisbane look to properties of a similar size and share other comparable traits that have been recently sold. This data is used to determine the market value of the property as if the home was ready to move in on that date.
How are land and off-the-build homes valued?
There are many methods that may be used to value undeveloped land and fully developed properties. When it comes to new builds and homes that have been bought off-the-plan, the most used method is the comparison approach. More complex properties, such as commercial or strata plans may use the hypothetical development.
As mentioned above, as-if complete valuations assess comparable sales. These comparable properties have been completed in the same area or close by. The plans of the property, and other relevant data that have been already decided or established may be used for better accuracy.
How much value is added on completion?
The state of the market can vastly change from the time an as-if complete valuation was written to the date of completion. Delays may also occur during construction, meaning more time is given for the market to rise or fall.
As such, the value of the property has a great potential to increase or decrease. However, most see their property’s market values increasing over the course of the experience.
What happens if my off-the-plan home loses value?
It can be quite devastating for new homeowners to discover that their property has lost value once complete. Terrible as it may sound, it is sadly a common scenario in many parts of Australia. If your property value is lower than the initial valuation completed for your mortgage security, then this is known as a valuation shortfall.
Here’s what you can do if this occurs:
- Talk to your lender about updating your loan: They may be willing to lend more money depending on your finances and the current market value of your property.
- Dip into any savings: if you have managed to save some extra money while your property was being built then you could potentially use this to help pay the difference.
- Approach another lender: With the help of a mortgage broker, you may be able to secure a new loan that is more manageable in the current market. This could result in a new valuation that may have better results.
- Turn to family for help: If it is possible, a family member may help financially with a gift or alternatively, you could add them to the property title to assist with securing finances that way.
Talk to a property valuer today
If you would like to know more about valuing property that is not yet built and is being purchased off the plan, talk to one of our valuation experts today. Their expertise can provide some insight into your situation for better and more informed decision-making.