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There are times in your life when you need a professional property valuation … and other times when you don’t.

But, with rising interest rates inspiring a growing number of Australians to switch lenders and look for a better home loan deal, do you need to get your property valued now? Or will your lender do it?

To help you understand property valuations, EA invited experienced property valuation specialist Chris Mason, director Mason’s Valuation Office, to share his insights.

What does a property valuer do?

 Property valuers give professional advice to individuals and businesses who buy, sell, and rent land and property. They estimate the market value of land, buildings, and real estate.

Does a property valuer work independently for an individual client? Or for the banks/financial institutions?

 “Regardless of who engages the services of a valuer, the valuer should provide independent, unbiased and well-researched advice,” Mr Mason says. “A valuer may provide their advice to both individuals, companies, banks and lenders.”

 When do people legally need to get property valuation done?

 People are, generally, not legally bound to obtain a valuation,” he says. 

The reason they might seek out the services of a valuer could include the following:

“When they are looking to purchase a property to live in, or as an investment, a valuation provides good feedback on what they should pay for the property,” Mr Mason explains. “This helps make sure the client is informed, that they can afford the property, and it prevents them wasting time on a property that is not worth what they thought it was or something that is potentially out of their reach.”

 When you are looking to sell a property, there can be many opinions from well-meaning friends and family or from unscrupulous agents. A quality valuation of the property helps you to understand where the property is in relation to the market, and you can save time by negotiating with realistic agents and/or family to achieve the best price possible.

Going through a separation or divorce can be very difficult, and big financial decisions need to be made with the best information available. So, getting a property valuation is important to provide accurate advice when you need it.

At what other times should  property valuations be done?

• capital gains tax purposes

• pre-sale or pre-purchase

• all SMSF/DIY Super Funds are obligated to lodge an annual return with the Australian Taxation Office (ATO) – and the ATO suggests that all SMSF/DIY Super funds should use market values for all valuation purposes.

Is the value of commercial or industrial property calculated differently to residential property?

 We value residential, retail, commercial, industrial and specialised properties. Although the way we approach valuation of each type of property remains the same, the techniques we employ to value each type of property can differ.

How much does it cost to get a property valuation? How long is the valuation valid?

Valuations can start at around $600 for basic residential properties, through to thousands of dollars for commercial and specialised properties.

A valuation report does not generally carry an expiration date however, with property values evolving all the time, a valuation report is typically only relevant for about six - 12 months.

The bottom line

Property valuations have a direct impact on your borrowing capacity.

For example, if you’re selling a property and your buyer’s lender values your property at a lower price than the accepted offer, their mortgage application could be rejected. This is because the size of the mortgage available to a buyer is a percentage of the purchase price or the lender's valuation – whichever is lower.

And if you’re the one applying to borrow?

A key step in your mortgage application process includes your lender doing their own valuation of the property you want to buy. If the surveyor downgrades the value of  the property, your lender may not approve the home loan amount you need.

When it comes to property valuations for other purposes, such as assessing the pool of an estate to settle a will or dissolve a marriage, the difference between an inexperienced property valuer and a quality valuation could mean much less money in your pocket, or more money than you’d hoped being awarded to another person.

Go deeper:

9 free websites for judging your property’s value

How a property valuation can affect your home loan

A Guide to Comparing Home Loans & Refinancing

Financial disclaimer

The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.