Understanding the Appraisal Process as a Seller
The Australian real estate landscape continually evolves; therefore, navigating the current conditions often becomes challenging for property investors. Despite increasing positive ratings, a substantial 25% of property sellers rank their overall experience as ‘average’ to ‘poor’. ‘One in four Australian sellers encounter issues or is dissatisfied’– 2024 State of Real Estate Report: Insights from Australian Buyers and Sellers. Your seller’s agent or real estate broker may help you sell your property fast but what about the satisfaction of getting the best worth of your investment? Wouldn’t you like to ensure the best return on your property sale? To get the maximum return by selling your property, understanding the right value of a property is crucial; it helps you make informed decisions. In this blog, I will explain the importance and the process of property appraisal that will help you sell your property right time to the right buyer at the right price.
What is Property Appraisal?
A property appraisal, conducted by a neutral party, is an estimate of a property’s value in the current market. The professional appraisal report is created to determine the right sale price for a property. This property price is determined by considering various factors such as condition, size, facilities, location, income, market trend, and others. Usually performed by a real estate agent, an appraisal should generally only ever be considered an estimate. Real estate brokers use their knowledge, experience, and professional judgment to judge the estimated market value that helps sellers in pricing their property for sale with enhanced satisfaction for getting the maximum yield.
What’s The Difference Between Property Appraisal and Valuation?
The words “appraisal” and “valuation” are often used interchangeably but there is a significant difference between the two. Also known as a market appraisal, property appraisal is a professionally estimated potential market price of a property based on various factors including recent sales of similar properties in the same area. Appraisal report is not used for financial decisions, legal, or statutory requirements.
The property valuations are in-depth assessments to assess the market price of the property. Property valuations are carried out by certified property real estate valuers who charge a fee for property valuation services. Property valuation is legally recognized that you need for legal and financial purposes like mortgage loans, taxation, property settlements, etc. Most banks and private lenders use property valuations for risk assessment.
Types of Property Appraisals
Market price, costs, and income are three major categories of property appraisals.
- Market Appraisal: The market value appraisal establishes a property’s worth in the present market. This evaluation considers current market trends and the prices at which comparable properties in the neighborhood have been recently sold.
- Cost Appraisal: The cost appraisal is assessing the price of rebuilding or replacing a property. It is the estimate of the amount required to reconstruct a property in the case of a disaster. This assessment is done for insurance purposes.
- Income Appraisal: A property’s income or revenue-generating appraisal is utilized to assess passive income potential. For commercial properties like office buildings or apartment complexes, a revenue-generating appraisal is utilized to assess passive income. The appraiser considers the rental rates, the property’s occupancy rate, and the potential for future rental income.
Whether you’re an experienced investor, or homeowner, considering your first property sale, or simply curious to know the property’s worth, appraisal is a key to setting realistic expectations. Property appraisal benefits you in multiple ways in addition to knowing the right market price of your property.
What Are the Benefits of Property Appraisal Before Selling? Nine Advantages of Property Appraisal
- You can make wiser financial decisions using appraisal. You get a better idea of the total net worth of your property. Appraisal insights help you make important financial decisions like refinancing your home, evaluating your investment portfolio, or creating retirement plans.
- You can encash favorable market conditions to increase the yield on your investment. Periodic appraisal gives you a fair idea about the right time the sell and evaluate the investment growth.
- Appraisal reports provide insights enabling you to match the requirements of local buyers with renovations. A home appraisal helps you understand what amenities and characteristics local buyers are looking for. The insights ensure that the money invested in upgrades to raise the appeal and possible market worth of your property comes back to you with a high profit.
- The appraisal report demonstrates how your market worth has increased by recent remodeling/upgrades/renovations. This knowledge helps like a marketing tool to sell your house at a higher price.
- Appraisal report informs about the changing worth of your property with the ups and downs in the real estate market.
- The appraisal report informs about the demand, trends, and competition. It gives you a fair idea about the prices of other similar properties in your locality.
- Property appraisal helps investors assess the potential return on property investment besides helping them mitigate risks associated with their investments in real estate. It helps you assess the potential investment return of a property.
- An appraisal helps you identify any potential issues with the property that are not immediately apparent. The appraisal report highlights things like structural damage, environmental hazards, zoning issues, and other issues that can impact the value of your property in the future.
- Bridging loan helps you buy a new property before you sell the current one.
- What is a bridging loan or bridging finance? Bridging loans or bridging finance are short-term loans that facilitate buying a property before selling the existing one to maximize the return on property purchase investment.
- How does a bridging loan help property buyers? A bridging loan, sanctioned for a maximum of 12 months at the standard variable interest rate, fills the gap between receiving funds from selling the existing home and buying a new property available for a short period at the profit-promising price.
What Is Considered in Property Appraisal?
A property appraisal report is created after a professional examination of your property. Your seller’s agent or real estate broker typically evaluates the following contributory factors to estimate the appraised value:
- The size of the property
- Location
- Neighbourhood
- Bedrooms available
- The property’s condition and construction type
- Fittings and fixtures
- The property’s features
- Proximity to places like schools, public transportation, shopping malls, etc.
- Recently sold similar properties in the area
- The season in which you intend to sell your property
So, are you ready for appraisal of your property that you want to sell? You need to follow a strategic approach with preparedness for accurate and beneficial property appraisal.
How to Streamline Property Appraisal: A Strategic Approach
- Hire an Experienced, Licensed, and Reputed Appraiser: Real estate brokers having tech-based tools are crucial players when it comes to property sales.
- Schedule the Appraisal: It needs clear communication between you and a professional appraiser to schedule the visit and inspection.
- Prepare Property: Before the appraisal visit, make sure the property is clean, functioning, well-maintained, and easily accessible.
- Documentation Review: You must have important documents like property records, title deeds, recent sales data, and renovation receipts well arranged. It helps to verify the property’s legal ownership and history.
Staying informed about the real estate news, the economy, housing interest rates, new lending schemes, etc. is essential for navigating the Australian property market to ensure a good return on investment. Hiring a seller’s agent with experience in guiding investors to get the maximum worth of their property streamlines the entire process while making you confident in deciding right.
Pro-tip: Vasttu Real Estate has the expertise and an extensive network to attract qualified buyers for your best-appraised property. Book a free appraisal by Vasttu Real Estate.
