This is a question we hear often at Thought Leaders Real Estate, so we decided to pen an article on this topic

This is a question we hear often at Thought Leaders Real Estate, so we decided to pen an article on this topic.

Today, we are discussing what the difference is between a valuation and an appraisal, and perhaps when you would need either.

Firstly, what is an appraisal?

An appraisal is an estimate or an opinion of a specific property’s market value. This is determined by a number of factors including what the market is currently responding to. Most real estate agents in Perth will offer this as a free service.

How is an appraisal determined?

Market prices can fluctuate over a period of time. Therefore, it is necessary to compare the property with similar properties within the same locality. Particularly, to inspect properties that have sold in the previous three to six months. It is important to note that no two properties are identical, therefore an appraisal is only subjective, or opinion, which is based on data available at the time. Real estate agents in Perth should have sound knowledge of recent property transactions in the area, and can therefore provide an estimate of a likely selling price. Appraisals offer a good guide of what your property may be worth.

What is a valuation?

On the otherhand, a valuation is a more formalised, written report that is prepared for the specific property with a fee charged for this service. This is also delivered by a real estate agent.

A formal property valuation is an impartial calculation of the value of a specific property. It takes into account factors such as the size and aspect of the property, the land the property is on, number of bedrooms and bathrooms, quality of the building materials, council zoning of the house, features of the home, the condition of the property, any hidden property damage, environmental risks to the property as well as the influence of the market on the sale price of the property.

Why would someone need a valuation in lieu of an appraisal?

Valuations are ordered when a definitive value is required for a specific purpose – examples are: a property settlement; dispute resolution; financing a property purchase (or refinancing); deceased estate settlements etc.

There are many factors that need to be taken into consideration when working out the value of a property. This can include  property type, physical location, size, building structure and condition, access, planning restrictions, zoning, and caveats or encumbrances.  With a real estate appraisal, style or street appeal are not taken into account.

You should consider a property valuation when you need to produce a definitive value for your property. Examples of these situations can include property settlements, applying for finance, or dispute resolutions.

Speak to Thought Leaders Real Esate

Contact us to get free consultation about your real estate and property management needs. If you are a landlord looking to place your property on the market, we can assist you by providing you with either an appraisal or an valuation of your Perth property. Our agile team will be able to get you the best price for your property. Get in touch.