4 Reasons Why You Might Need a Property Valuation
There are several situations where a property valuation may be recommended or even required. Property valuations may be conducted by estate agents when you decide to sell your property to determine an asking price, or by a mortgage lender if you are buying a new property or wish to remortgage your current home. You may also want to have a valuation carried out independently if you are challenging the results of a previous valuation, for example, if the buyer’s lender has downvalued your property, or if you want to understand the current value of your home before you conduct renovation work.
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Different Property Valuation Methods
There are various methods of property valuation that may be used when getting an accurate valuation figure for your property. They will usually depend on who is carrying out the valuation and the purpose of doing so. In the case of buying a property, the mortgage lender will often order an RICS surveyor to value your property to ensure that the amount you have applied to borrow to purchase it is in line with how much it is currently worth. The main aim behind this is to reduce risk to the lender. Most of the time, this is an off-site survey that is carried out by analysing local sold prices of similar properties in the past few months.
Property Valuation Approaches
There may be a different approach to the valuation depending on who it is conducted by. If you are selling your home, then it is advisable to have at least three local estate agents provide a valuation on your home before working out the average to get an ideal asking price, rather than going with the highest or the lowest figure provided. Since there are various factors that go into valuing a property such as its appearance and features, location, proximity to amenities, and much more, it can sometimes be quite subjective, so it is not uncommon for different estate agents to provide varying figures when it comes to how much they believe your property to be worth.
A valuation survey carried out by an RICS surveyor is typically more analytical. This figure can be very different compared to that offered by a surveyor since they will generally only use local property market data to determine the worth of the property, and they will rarely visit in person as part of the process.
Property Valuation Techniques and When they are Needed
There are various situations where you may find that a property valuation is necessary. These include:
1 – Selling Your Home
If you want to put your home on the market, then you must have an up-to-date valuation figure before you begin. It is very unlikely that your property is going to be worth the same as it was when you bought it. An accurate valuation of your property before you sell will ensure that you are asking a competitive price that is neither too low nor too high for your area and the current market. This will help you attract more potential buyers and help you avoid issues such as down valuations in the process.
2 – Buying a House
If you want to buy a house, then don’t just go by the asking price to determine what it is worth. While it is advised that sellers get an accurate valuation before putting a property on the market, this is not always the case. Ordering a valuation of the property can be a wise idea before you complete the sale to make sure that you are not going to be paying more than necessary for the property and to give you more negotiating power with the seller. In most cases, property valuations that are carried out when you buy a house are ordered by the mortgage lender. They will instruct an RICS surveyor to conduct a valuation survey, which is typically a desk-based survey that looks at local sold prices of similar properties in the past few months.
3 – Remortgaging
Another situation where you may need a property valuation is if you want to remortgage your current property. Depending on how long you have owned the property, it is unlikely to be worth the same as you paid for it, and an accurate valuation figure will help you ensure that you can borrow as much as possible.
4 – Renovations
Finally, you may want to have a valuation carried out on your property if you are thinking of having significant renovation work done to increase its value. Since renovations like new kitchens, bathrooms, loft conversions, garage conversions, basement conversions, and extensions can all add significant value to a property, it’s worth investing in a valuation survey beforehand to determine how much the property is worth, and how much value any renovation work you conduct may be able to add to the property.
Real Estate Property Valuation Methods
If you are putting your home on the market, then you will usually receive the first valuation from your estate agent. It is a wise idea to ask for a valuation from several local estate agents to come up with an average figure to use as an asking price. Some estate agents offer free initial valuations to get an opportunity to see your property and let you know more about the services that they offer.
An estate agent will generally use a combination of desk-based and in-person methods to come up with an accurate valuation figure for your home. They will check local property records first to see what similar properties to yours have sold for in the area over the past few months. Then, they will visit your property to carry out a thorough inspection and take into account various factors including the location, basic features, amenities nearby, and the potential for improvement along with the overall appearance and condition of the property.
RICS Property Valuation Methods
A property is more likely to be valued by an RICS surveyor if you are buying a new home or remortgaging a current property that you own. RICS surveyors are typically hired by mortgage lenders to conduct surveys on properties before the mortgage money is released to the borrower, to ensure that the lender is not putting themselves at unnecessary risk by lending more than the property is worth. You can also work with an RICS surveyor privately if you want an independent valuation of your property for any reason.
RICS surveyors may use one of two different property valuation methods to get an accurate figure for your property or the property that you want to buy. Generally, they do not need to visit the property to value it, as they can gather and analyse information from the Land Registry and similar house price indexes to come up with a fairly accurate figure for how much a property is likely to be worth based on the sold prices of similar properties in the area over the past couple of months.
They may conduct a drive-by inspection of the property to look at it from the outside and make sure that it is as expected. However, if there is more risk to the lender, the property is in a location that the lender is not familiar with or if there is not a lot of online information available for the surveyor to use, then an in-person survey might be needed. This will usually take no longer than one hour and involves the surveyor visiting the property to take a look around and determine how much it is worth.
Which Property Valuation Methodology is Right for Your Situation?
The best method to value your property will depend on your specific situation. An RICS surveyor may be the most ideal choice to carry out the valuation survey if you are buying or remortgaging, or you need an accurate figure before carrying out renovation work on a home. In some cases, an RICS surveyor may be arranged to survey the property on behalf of the lender, which is usually the case when you are buying a new property or have applied to remortgage a property that you already own.
On the other hand, there are some situations where an estate agent valuation will usually make more sense. Most of the time, this is the best option to choose from if you are selling your property. An estate agent will usually use the valuation as an opportunity to meet you and pitch their services, so you can use it to figure out if this is the right estate agent to sell your home. Along with this, they usually look at more aspects compared to an RICS surveyor and may be able to provide advice on how you could potentially raise your home’s value before selling.
There are several different types of property valuation methods used by different professionals for different reasons. If you are selling, buying, renovating, or remortgaging a property, it’s a wise idea to have it valued.
