Guest Blog: Rowan Hemsley on why you should use a licensed valuer before buying or selling your home

By the resi financial blog team, 01 April 2014

Use a licensed valuer before buying or selling your home

Buying or selling a house is rarely completely straightforward, and whether you are a buyer or seller, it's likely to involve you in a lot of expense, possibly more than you bargained for. It's tempting to cut corners, but as so often happens, this may not save you money in the long run. One expense which you definitely shouldn't try to avoid is the cost of a proper valuation.

Why sellers need a valuation

When you begin the selling process, you will probably start out with a rough idea of how much houses similar to yours are selling for, and the real estate agents you consult will suggest a price which has been arrived at in much the same way; by looking around at the local property market.

However, real estate agents will be competing with each other for your business, and will also have in mind the commission to be made on the sale. The combination of agents and vendors both wanting to get the highest price possible can result in the listing price being set unrealistically high, which in turn can result in your property taking much longer to sell.

A licensed property valuer is completely objective, and will approach the task of valuation in a much more systematic way. The valuer's report (which will be in writing) has the status of a legal document, which may become important if any disputes arise in the course of a sale. The valuer will also be able to point out any potential issues with the property which could hinder the end sale price - it will probably be much cheaper to sort these out now, rather than have a buyer use them as a pretext for lowering the price.

If your property has been on the market for some time and you are receiving offers well below your asking price, it can be beneficial to obtain a valuation to see if your property is overpriced. This could be as a result of market movements throughout the campaign or an overly ambitious initial listing price.

Why buyers need a valuation

If you are seeking a loan to buy a property, the lending institution will almost certainly require a report from a valuer approved by themselves. However, there are plenty of reasons why your own valuation could be useful to you, as, by the time you get to the point of arranging finance, you will already have started the buying process, which is rather late to be learning about potential problems.

The valuer will make accurate measurements of the house, and note details about structure and condition, as well as features such as vehicle access and services. The report will give you important information about the legal status of the property, such as restrictions on how it can be altered or used, rights of way, local zoning issues, and other details which you might not otherwise discover at this stage.

The valuation figure which is arrived at will take account of all these factors, as well as the history and present state of the local property market. It will help you in reaching your decisions in a rational way, rather than letting yourself get caught up completely in an emotional love affair with the house. (Don't blame yourself too much; everybody does this.)

If the licensed valuer reports that the house has been over-priced, you will have a sound basis for negotiating a lower price with the vendor. A valuation does not act as a building inspection report which should be obtained from a suitably qualified building inspection provider.

Buying a property from a developer

You can sometimes see very tempting offers from developers selling houses or apartments, which may be unfinished or even barely started. The developers advertise perks such as low deposits or help with finance and stamp duty; they suggest that the value will soon rise steeply and that by buying early you can 'lock in' to a low price. A licensed valuer will be able to help you make sense of all these claims, and importantly, relate the development to others in the area. The amazing view might not be there much longer, if another apartment block is soon going to be built in front!

Buying property as an investment

If you are considering buying property to rent out, you will need to make some very careful calculations about profitability. Research is crucial and you should not even think of buying a house or apartment for rental without the help of a licensed valuer. The good news is that the cost of the valuation of an investment property can be set against tax.

Who are the licensed valuers?

Although Australian states have their own professional schemes, the organisation covering the whole country is the Australian Property Institute. Its history goes back as far as 1926, and it describes itself in these terms: "The Institute’s primary role is to set and maintain the highest standards of professional practice, education, ethics and professional conduct for its members and the broader property profession."

Author Bio Rowan Hemsley is a Licensed Valuer and the director of Qwest Valuations, a boutique property valuation and consultancy firm in Perth, Western Australia that provide independent and impartial property advice to a range of clients. Rowan has many years of experience in the valuation industry and possesses an intimate knowledge of the Perth property market. Sources:

Sources:
https://www.moneysmart.gov.au/investing/property
http://www.api.org.au/menuitem/about-api/find-a-property-professional

Categories: Guest blog, Property valuation, Qwest, Valuations