Property valuation is often seen as a moving target that depends on a number of factors, but as James Freudian explains, there are still some core guidelines that never change.
There are often two market assessments that people refer to when talking about the value of a property – appraisal and valuation.
The appraisal is what a selling agent will provide to you. An appraisal is a market indication based on some comparable sales that the agent is aware of, it is not a true property valuation. If you rely on this and list your property for sale, you will nine times out of ten, find that this appraisal price is not an indication of real value.
A valuation is a calculated figure that includes an assessment of the land value and the improvements, taking into account the depreciation of the property since construction. It also includes sales comparison, construction costs, town planning commentary and a breakdown of living areas, outdoor areas and car areas.
Every day, I see listing prices very rarely in line with the market value of the property. Sellers start with a higher price to see if this can be achieved, then generally speaking the listing or asking price is reduced until there is an offer from a prospective purchaser. A selling agent’s appraisal is generally not an indication of real or market value. Real value or market value is the value of a property assuming that there is a willing buyer and willing seller in an arm’s length transaction. This figure is what is reflected in a valuation.
As reported by Property Valuer