What's the Difference Between a Property Valuation and a Property Appraisal?

An appraisal is an ‘opinion’ on where your home sits in the market and is prepared by a reputable and experienced Property Consultant. It is used as a guide to pricing a property for sale or for rent. Valuation is conducted by a Registered Valuer with set criteria of the property.

An appraisal is simply an estimate or an opinion of a property’s current market worth, considering what the market is responding to and other factors. This is usually offered as a free service by real estate agencies.

A Valuation is a written report prepared on the property and there is generally a fee charged for this service.

Appraisals and valuations are used to determine the market value of the house, and the terms are often used interchangeably. If you're thinking about selling a property, a valuation may not be ideal for your purposes due to the conservative nature of the assessment - but what exactly is the difference between the two?

What’s a property valuation?

A valuation is the more formal of the two processes and tends to be more conservative as it is used for legal or banking purposes rather than for selling a home. To obtain a valuation, a formal report is created by an accredited valuer who has gone through the necessary training successfully. This report is done over 2-3 business days and contains a thorough breakdown of the features of the property, including:

• Land size (m²)
• Number of rooms
• Risk ratings
• Environmental
• Market
• Local zoning
• Condition of the property

These are the baseline criteria that are always included, but it can include other aspects as well. Another key difference between valuations and appraisals is that valuations can be used in legal matters, such as when applying for a mortgage on your property, establishing estate value, etc.
A court can also request a valuation be done to resolve property settlements or other disputes. Since this is a more official evaluation that takes time and certain qualifications, there is usually a fee associated with property valuations. Afterwards, you will receive a report on the value of the property, the breakdown described above, and explanations for each segment’s value assessment.
It’s worth noting that with the availability of information and data that formal Valuations are becoming more and more accurate.

What’s a property appraisal?

Appraisals are to be used as more of a guide and allows you to get a better understanding of a possible selling price.
Market prices can vary and change over time so it is necessary to compare the property with similar properties in the same location that have sold in the previous 3 to 6 months. Obviously no two properties are identical so an appraisal is only subjective and an opinion based on data available at the time.

Property Consultants should have a good knowledge of recent property transactions and therefore should be in a good position to give an estimate of a likely selling price by comparing recent comparable sales.

An appraisal can be carried out by any real estate professional with no fee for the service. The process of an appraisal is based on the real estate professional’s knowledge of the market in the area and their assessment of the property.

When you get an appraisal from an agent who does home appraisals in your area, they will have background knowledge of the prices that other homes in the area have gone for and can give you an estimate based on their professional experience. Getting a house appraisal is also much faster than a valuation because there are no formal criteria involved.

How are appraisals determined?

Since appraisals are based on the opinion of one professional, you might also like to gather a few appraisals from different sources. When you’re selling one of your biggest assets, it’s worthwhile meeting with 2-3 agents to determine who you feel most comfortable with.

A property appraisal is the perfect starting point for the process of selling a house. It’s also a great way to start a dialogue with potential agents, compare real estate marketing strategies, and get tips on selling your home.

A good starting point is to review which agents are active in your local area, as the more homes they are selling in your area the more active they are and generally more accurate with their price guides. Be careful using an agent outside of your local area as they will more than likely not understand the nuances of your area and the factors that affect the price

Local property web sites are now able to assist you with your search and evaluation for the right advice:
• realestate.com.au
• domain.com.au
• ratemyagent.com.au

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