The Basics Of Valuations

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The basics of valuations. Property valuations can be very tricky, and as a buyer or as an owner, you’ll suddenly be saying, “Ah, it’s worth way more.” Look, there are different types of valuations; one that the assessor or the banks use, some that maybe emotional buyers or emotional sellers may use, and then sometimes when the real estate agent thinks of their opinion. To be honest, it’s an opinion. 

Fortunately, I’ve actually been involved throughout my finance career, and now my property career, in a lot of valuations, reviewing a lot. I’m just talking a lot. When it comes to valuations, one of the simplest ways for me to understand the basics of it. Now, through my conversations with valuers, both the good and the bad, through my many reports I’ve read, through customers I’ve challenged reports for, there’s some simple terminology that’s used across them all: similar, inferior, superior. 

If you break down the basics of where they’re looking into this, you can also break that into three areas too: land size, interior, exterior. Now, I’m not saying that the valuer’s job is that simple. There’s a lot more detail, materials, finishes, a lot of other things that they go into, but if you’re talking about the absolute basics as a buyer or an investor, what should you be looking for? 

When you’re looking at them, those three areas, are should be the key ones that you focus in on. What is the land size component of what I’m buying? Is the interior inferior, similar, or superior than the properties around it that are selling for maybe higher or lower? Then lastly, how is that exterior position in terms of the materials and quality of finish, and the surrounding of their property and that quality of finish? 

When you’re considering valuations and what you think might be a relevant comparable sale on the basics, without going into a heavy amount of detail in terms of the bedrooms, the kitchen finishes, the bathrooms, and so forth, consider similar, superior, inferior, and consider those three together when you’re looking at the basics of valuations. 

Obviously, you want to consider them with like for like, example unit and unit, home and home, three bedroom, one bathroom, one park, but when you’re looking at it, those three are the foundations of what valuers will look for to make their decision as to why a comparable sale might be valued at that particular amount. 

That’s it from us here at InvestorKit, the experts in wealth creation helping you take action.