What Is Property Valuation

What Is Property Valuation?

A property valuation is an inspection carried out to help determine the current market value of a property.

It is usually undertaken by an estate agent or an independent valuer, typically acting on the instructions of the vendor or a lending institution who are considering funding its purchase. Buyers may also request a property valuation if they are considering purchasing a property, in addition to structural surveys that assess its physical condition.

Before providing a mortgage or refinancing, a lending institution (such as a bank) may request a valuation to ensure the loan can be covered by the security value of the property. This is gives them with the confidence to lend the capital, knowing that if the mortgage goes unpaid, they can recover any outstanding amount by re-selling the property.

Preferred licensed property valuers tend to be used by lending institutionsEstate agents tend to conduct property valuations for sellers of the property. The valuation provided by an estate agent and that provided by a licensed valuer may be different. This is because estate agents are working for the vendor (i.e. the seller), and receive commission based on the price that the property is sold at. They may, therefore, be more optimistic in their assessment of the property’s worth than a licensed valuer who is legally responsible for the information provided by them, so must produce their valuation based on facts and accurate up-to-date data.

It is important that sellers ensure the property is in as clean and tidy a condition as possible prior to the valuation, as this can have an impact, as can the state and style of decorationsfurnishings, and so on.

A property valuation is typically produced as a report and, in addition to photographs and plans, may contain the following information:

In order for the valuation to be as fair and accurate as possible, a property will typically be compared with other similar properties in the local areaValuers will examine planning restrictions, by-lawscouncil zoning, and so on. Factors such as local infrastructure, reputation and attractiveness of the neighbourhood, market demand, and amenities (e.g. schools, hospitals, green spaces, and so on), will also be taken into consideration.

Valuers also refer to data provided by the Land Registry, which updates house prices across different areas on a monthly basis.

 Article by Priscillah Munangatire .

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