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The Difference Between a Property Appraisal and a Valuation

Many people may not be aware of the difference between a real estate appraisal and a valuation, but it’s really important to know when you’re entering into any property transaction.

1. Appraisal

An appraisal is an informal valuation or suggestive estimate that gives sellers a price guide. It gives homeowners an estimate or opinion of a property’s current market worth, considering the market’s response and psychological factors like street appeal to arrive at an estimate. Appraisal amounts often differ as they’re prepared from comparative data and biased points of view.

Since market values fluctuate, an appraisal given today may differ within a few months or a year, as it’s usually based on similar properties sold in the same area within the last three to six months. If there is no directly comparable data within that time period, it becomes even more of an overall guide than factual. Real estate agencies usually offer appraisals as a free service.

2. Valuation

A valuation is conducted by a qualified and certified professional with an unbiased opinion, unlike real estate agents who have an interest in offering an appraisal to potentially get the listing. The valuation is a diligent, credible report accepted by authorities and lenders, so will hold up in court. Valuations are ordered when a definitive value is required for a specific purpose. They charge a fee for this service.

Accredited valuers delve much deeper into their research and don’t compare your home against similar properties that have recently sold or are for sale. They mostly consider the facts – such as location, size, building structure and condition, zoning, access, planning restrictions, future planning and caveats or encumbrances. 

Valuations are essential for various reasons:

  • Market value is a key factor in determining the loan amount when you need a home loan, refinancing, or calculating your equity.
  • If you’re going through a property settlement, a valuation can ensure that both parties receive a fair split.
  • A property valuation is essential when you must prove the value of a deceased estate or are in dispute resolution.
  • It’s crucial for property investors to have a reliable valuation to ensure they are not overpaying or undervaluing a property.
  • Property valuations are also helpful in divorce cases, deceased estates, legal disputes, and insurance purposes.

If you are considering selling a property in Albany, Mount Barker, Denmark or Walpole areas, please fill in the form below or give me a call to discuss your needs. Consultation is free with no obligation or harassment – ever.