You may be looking to sell your house or reappraise your existing property to unlock equity. How do you arrive at a realistic valuation?

Many factors influence the value of your property, including size, design, location, the current market economy. It can be difficult to gauge the exact value of your property, and even experts opinions can vary by tens of thousands of dollars.

The truth is that the worth of a property is always changing in line with market forces and the first step in getting an accurate valuation is to do your own research. Start observing the market around you. Look into homes in your area; have any houses near your been sold recently? What were their asking prices and how much did they eventually sell for? What range of rental prices are common in your location? Visiting properties in person is one of the best ways to get an accurate picture of the current market.

Several methods are available for getting your property formally valued. The option that suits you best will depend largely on your purpose for the appraisal: If you are planning to sell your home, you will be using the value as a guide for deciding on your asking price, whereas a valuation with the purpose of securing a home loan will need to satisfy your bank or other lender.

Let’s have a closer look at various ways you can value your property:

Real estate agent: Obtaining a valuation from a real estate agent is common for property sellers. It’s a good idea to get at least three different opinions, as opinions can vary wildly and some agents may overvalue your house in order to secure a new client. As real estate agents are really offering an informal opinion, rather than an official appraisal, such valuations aren’t enough to secure a loan.

Bank: Your bank or lender will probably want to value your property prior to approving your mortgage. Different companies choose to handle this in different ways; some may send a surveyor to inspect your house, while other may simply look at market trends or an algorithm to estimate your property’s value. This is the bank’s way of measuring the equity in your home and the risk it would take on by loaning you money; so estimations are likely to be a bit on the conservative side. Some lenders will insist on using a surveyor they know and trust.

Surveyor: Individuals can hire a chartered surveyor to perform an independent property valuation. You will have to pay a fee, but a surveyor is a highly trained professional who can give you an accurate valuation according to your chosen parameters (mortgage valuation, home condition report, homebuyers report etc.). Some mortgage lenders may accept the opinion of a qualified independent surveyor, while other will insist on using their own approved people.

Online tools: If the idea of paying hefty fees for finding out the value of your own property is too much for you to bear, then try looking online. A variety of websites, particularly the common real estate listing sites, will provide you with a free estimate. These are generally automated processes which utilise algorithms based on known property transactions around the country.

While such sites as domain.com.au, onthehouse.com.au and realestate.com.au are good options for your own personal reference, such valuations are unlikely to convince a lender. Use online tools as a first step toward preparing your buying budget or selling expectations.

Get in touch with our Mortgage Advisors for more information on home equity and how the value of your property can affect your mortgage.