A real estate agent’s appraisal and a property valuation from a certified valuer are both used for property assessments, although there are some crucial differences.
Appraisals are informal inspections that establish an estimate of your property’s selling price. These are conducted by agents who require no formal valuation training. Their appraisals are subject to bias since they aim to achieve a certain selling price for the property. As a result, the accuracy is questionable.
An independent real estate valuation is a formal and legally binding report that provides an impartial judgment of a property’s market value. The report includes a detailed analysis of market data, the physical characteristics of the property, and many other crucial factors. Independent valuations are performed by a licensed valuer who has formal qualifications and experience in the field. This enables them to form expert valuations.
Both appraisals and independent valuation’s objective is to approximate property value. However, real estate valuations are generally considered to be more accurate and reliable. They are enacted by valuers certified by the API (Australian Property Institution) which makes them liable to conform to strict industry standards and regulations. Additionally, valuations can be used in many more legally binding matters outside of buying and selling property.
Real estate agents versus valuers
A real estate valuer is a professional registered with the Australian Property Institute (API). They need the necessary education, training, and experience requirements to become certified. This includes:
- Bachelor’s degree in property, valuations or real estate.
- Experience shadowing a qualified professional in the field for between 1 and 3 years is required.
- Registration for certification with the API.
- A core competency learnership with extended education in the methodologies, regulations and guidelines etc. needs to be completed for one to remain certified.
An agent, on the other hand, only requires:
- A 6-12 month course with a recognised organisation.
- 1 -2 years of supervised experience
- Once this is completed one can apply for a real estate license and apply to join a realty agency.
As you may notice there’s some overlap in the training and requirements of a property valuer and a realty agent. However, the agent’s training is more generalised than that of an API-certified valuer. The valuer is a highly respected credential that expects rigorous training and compliance.
How do property valuers complete accurate valuations?
Firstly, a CPV (Certified Property Valuer) is required to follow formal guidelines. The following steps are required:
- Inspection: An inspection of the grounds is carried out with standardised criteria. Features and characteristics that can impact its value are all noted.
- Research: Research into the local property market is conducted. Comparable properties in the area, recent sales data, market trends, and other factors all have to be assessed.
- Analysis: The data gathered has to be weighed against similar properties in the area. Any differences in the comparable properties are factored in and analysed to adjust the value accordingly.
- Calculations: There are various valuation methods used to calculate the comparison approach. The method depends on the type of property and the aim of the valuation. These methods include the sales comparison approach, income approach, or cost approach.
- Report: Finally a formal report is compiled with all the details of the above-mentioned data. This is where the final valuation is completed.
- Review: A review is done to ensure the report is accurate and compliant with the appropriate regulations and formalised guidelines.
The process that is undergone is exhaustive and can only be completed by an experienced professional. Therefore, it can only be carried out by a licensed professional who is equipped with the training to provide an accurate assessment. This can be carried out for residential, commercial or any other kind of property in need of a valuation.
Why do you need an accurate real estate valuation?
There are several reasons why getting an accurate property valuation is important.
- Buying or selling a property: An accurate valuation estimates an equitable price for your property. This safeguards you financially by ensuring you don’t overpay or undersell.
- Obtaining financing: A valuation is required before a lender approves a mortgage or any kind of financing. An accurate real estate valuation helps protect you from receiving an amount worth less than the value of your asset and it helps mitigate the risk on the part of the lender.
- Legal disputes: Valuations are admissible as evidence in legal disputes, like divorce proceedings or deceased estate settlements. A fair judgment relies on an accurate valuation report
- Estate planning: In the case of an estate planning matter, such as settling your will or trust. An accurate real estate valuation helps ensure equitable distribution.
- Property tax assessments: Valuations are necessary for determining property tax responsibilities.
Receiving an accurate property valuation is what informs crucial decisions regarding your biggest investments. You can feel secure when buying or selling an asset, obtaining financing, estate planning, property tax assessments, and legal disputes with a reliable valuation.
Summary
Dealing with the buying and selling real estate can be a stressful process. Since the process already calls for the use of a realty agent, we may feel inclined to use them for convenience. Although we know convenience is not what’s best for long-term investments. This is especially true about property investment.
An investment of this kind can be one of the most lucrative and not just in terms of profit. This endeavour is a step towards gaining an improvement in your quality of life. For the average person, the house you choose is an investment in your future and ideally you would want to feel secure in your decision. The only way to ensure this is by using qualified professionals who specialise in impartial valuations of your investment.
A CPV is the only trusted professional for valuing your property. Real estate agents have their own specialised role to play but that does not include formally valuing the property. They do not possess the qualifications or training required for accuracy.
Reach out to one of our professional real estate valuation experts for help establish the market value of any property.