What is real estate valuation?
Accurately analysing any property, let alone the market itself, requires specialised training. For the right combination of market and financial expertise, you need a licensed valuer in Brisbane. Certified Practising Valuers (CPVs) deliver a range of services to help you review and maintain the value of any property.
That includes the full scope of retail, commercial and residential property types. Valuation services can assist property owners with their tax and legal obligations too.
Each valuation involves:
- a comprehensive analysis of the subject property and relevant market
- the development of in-depth reporting describing the valuation methods used
- transparent communication with the customer.
- objecting land tax determinations
- dividing unit entitlements
- strata insurance
- calculating fair compensation.
Every need of the budding property owner or investor has a valuation service to match. More importantly, these valuations are delivered by highly trained professionals with extensive experience and knowledge of the property market throughout Queensland.
Real estate valuation and valuation services
Licensed valuers can assist across almost every area of owning property with in-depth research.
For instance, building valuations are designed to analyse all the costs involved in developing a property. That includes all material and labour costs. Everything that would be needed to rebuild it. The most common reason for this type of valuation is applying for strata property insurance.
Ensuring you get the optimal amount of insurance coverage is only possible with a legally certified property valuation report representing an accurate, objective statement of value.
Selling a property in Australia means paying your capital gains tax. This tax represents the amount that an asset’s value has increased over time. This requires a CPV to both calculate the property’s value at a given retrospective date, as well as that gradual increase in value.
Compensation valuations work similarly. As with capital gains tax, these valuations involve calculating past value as well as the change over time. The difference is that this service aims to calculate a decrease in value as a result of a third party. A CPV’s report can help ensure that you receive the appropriate level of compensation for your loss.
This barely scratches the surface of what’s available. CPVs can conduct valuations for family law, deceased estate matters, internal accounting operations and many more.
Real estate valuation and strategy
The accuracy of every valuation service, from commercial to residential property, is a result of proven technique.
Valuers are trained on three primary methods that combine market and industry research with financial analysis. Each one involves a careful review of numerous aspects of the property.
The methods are:
- the direct comparison method
- the cost summation method
- the capitalisation of net income method.
The foremost and perhaps most extensive method is direct comparison. This includes research of not only your property but the granular details of the area and the general market surrounding it. The asset’s condition, size, zoning restrictions, neighbourhood and risk factors all play a role.
Your valuer compares your property against others that were recently sold, using a combination of over 200 factors, including all of the above.
In support of this, property valuers rely heavily on extensive market databases.
The cost summation method is largely as its name suggests. This is where the financial analysis aspect of the process begins in earnest. Essentially, your property value tallies and considers the full breadth of costs involved in building the property, from materials to labour.
Finally, the capitalisation of net income method determines market value using net income generated by the asset in question.
How qualified are real estate valuers?
Licensed independent valuers are a crucial part of the property ecosystem in Australia.
Though some relatively similar services exist, such as bank and real estate appraisals, neither employs the same scope of expertise and analysis.
In short, CPVs are:
- trained by the Australian Property Institute (API)
- qualified to deliver accurate and timely valuations on any property
- held to high standards for integrity, ethics and professionalism.
One of the primary draws of a licensed independent valuer is objectivity. As mentioned, other appraisal services exist, but cannot provide that same degree of impartiality as they come with their own biases and conflicts of interest.
Naturally, bank valuers work on behalf of the bank. They want to determine whether or not the sale of your property would cover their losses in the event you fail to pay your mortgage. Since the bank wants to minimise risk, their appraisals are genuinely quite conservative.
It’s worth noting that some smaller banks may allow you to seek out an independent mortgage valuation report.
Real estate appraisals, on the other hand, are more concerned with selling or renting the asset in question. This is where a real estate agent earns their commission. Their appraisal is therefore an estimate of how much the property would go for on the market, but not an impartial one.
Summary
Property valuations are an intensive process that requires training in multiple areas. These include the property market and financial accounting. The qualifications they receive from the API set them apart from other professionals in the industry.
Their methods are extensive but fully tailored to the needs of the customer. Different combinations of approaches may be applied for residential assets versus commercial assets, a deceased estate versus home insurance valuation, etc.
Notably, independent valuation reports are legally certified. They can be submitted to courts across the country for a range of property-related legal purposes.
To receive a free quote on any valuation service, or to learn more about the process, contact one of our independent valuers today.