Frequently Asked Questions

What is a property valuation?

A property valuation is a detailed legal document provided by an independent, certified valuer that determines a property’s fair market value. A property valuation can either be made at its current market value or at a retrospective date and is used for a wide variety of purposes.

Determining a property’s value is a complex and extensive process and takes into account over 200 factors to reach an accurate figure. This is why it’s important to seek out the services of an experienced, certified valuer who can provide you with a property valuation report that is based on the specific subject property.

When is a property valuation needed?

A certified property valuation report is required for any kind of legal procedure, financial reporting or any other private matter in relation to the subject property.

A property valuation is necessary for the purchase/sale process and assisting in the calculation of tax liability. It can also be used in any kind of litigation proceedings, seeking compensation and for land tax objection.

Some of these areas of property are specialised and require an independent valuer to complete extensive due diligence to ensure it meets the legislative requirements of any governing body. As such, a property valuation will provide a comprehensive, transparent report based on objective data without any conflict of interest.

What qualifications do property valuers need to conduct certified valuations?

Certified valuations can only be conducted by a Certified Practising Valuer (CPV) and a member of the Australian Property Institute (API). In order to be qualified to conduct a certified valuation, property valuers must complete tertiary education, a two year traineeship and finally a professional interview. It will take a CPV approximately 6 years training before they can complete certified valuations.

An API accredited property valuer has an all-encompassing proficiency within the property industry and are considered the most highly regarded independent property valuers in Australia.

At Melbourne Property Valuers Metro, our team of senior valuers are all Certified Practicing Valuers to provide premium valuation services to all clients.

What is the difference between real estate appraisals and property valuations?

While real estate appraisals offer an insight into the local property market, a property valuation provides a legal, unbiased report that is completed by an independent valuer.

Real estate appraisals are provided by real estate agents that have conflict of interest. That is, they either want the listing (over quote) or sell the property to an acquaintance (under quote), and as horrible as the latter sounds, we have seen it occur many times.

On the other hand, a certified property valuation provides an independent and accurate value of the property with no conflict of interest at all. A certified property valuation will include a unique, comprehensive analysis on your property and can be used for pre-sale/pre-purchase advice purposes.

How does a property valuer determine value?

There are three main methodologies that our property valuers at Melbourne Property Valuers Metro will use to perform a valuation depending on the type of property. These are:

• The Direct Comparison Approach
• The Summation Approach
• The Capitalisation of Net Income Approach

The Direct Comparison Approach will compare the subject property to similar properties in the local market. The property valuer will analyse over 200 different variables between the subject property and the evidence.

The Summation Approach is used as a secondary check methodology used exclusively by API certified property valuers. This method will calculate the replacement cost value of any improvements made to the subject property and depreciating this value by its age. The fair market value will then be calculated by adding the subject property’s underlying land value to the depreciated improvements value.

The Capitalisation of Net Income Approach is reserved for commercial properties and can be used in addition to the direct comparison and summation approaches. The property valuer will use the net rental income of the subject property and capitalise this at a rate of returned sourced from comparable sales to calculate its fair market value.

What is the difference between a long form and a short form property valuation report?

An independent, certified property valuation is an inclusive report of the subject property and provides a comprehensive examination of a number of variables that contribute to its value. Depending on your requirements and the property type, there are two kinds of reports you can receive:

• Short Form
• Long Form

A short form property valuation report will include a comprehensive analysis of the property and include several detailed sections in relation to the subject property, any environmental factors and market volatility. It also includes a comparative analysis of local sales in the area. This report can be used in most cases, however, cannot be used for court.

A long form or full property valuation report is reserved for commercial properties, family law and litigation requirements and can adhere to judicial standards, including the necessary statutory statements that the courts require. A long form report will include an extensive market analysis, a detailed account of the subject property, and at least 5 – 7 comparative sales.

No matter what type of report you require, you will receive a property valuation that is researched and compiled evidence to ensure you receive a professionally detailed report. All members of our expert team of Valuers are Certified Practising Valuers (CPV) and members of the Australian Property Institute (API). We provide our clients with advice and expertise on a diverse range of property transactions for a variety of purposes.