|I hear a lot of complaints from clients in regards to the “black art” of property valuations where valuers do not subscribe to the same point of view as clients on their property value. While I don’t think this is a direct response to this, I still found this article in the Propell National Valuers newsletter very interesting, and helps to explain some of the issues that they (the human valuers) are faced with and how they assess things like neglected maintenance etc on homes that they are valuing.|
“In this series of articles for 2012, our aim is to increase your knowledge of the valuation process so that you understand more clearly why a stated valuation figure is adopted for a particular property.
By understanding how a Valuer has arrived at a final opinion as to the Market Value of a property, you will be better equipped to respond to market conditions or to prepare yourself both financially and emotionally for changes that have occurred in the market.
Of the Top 10 factors that affected valuations during 2011 (and throughout 2012 so far), the seventh highest rated factor was related to the Presentation and Care of a property.
Presentation and care refers to the quality or absence of maintenance, garden care, suitability and cleanliness of the property. Each of these factors contributes to the value of the property.
Let’s look at each of these factors in turn.
This is a big issue for property valuation and one that is often over- looked by property owners. Property owners need to ensure they are keeping up with maintenance issues. Valuers are not building inspectors, in that they do not conduct building inspections and write reports highlighting building related issues, such as wood rot for example, but they are trained to spot these things and make note of them during a valuation inspection. The more items a Valuer notices and comments on in the valuation report, the more likely it is that the valuation of the property will be lower than if the items hadn’t been spotted.
These items generally relate to the maintenance of the property or lack thereof. Termite damage for example is something that can happen at any time so will not necessarily be reflected as a maintenance issue as such, but a rotting gutter or broken down fence will. It tells the Valuer that the property owner is not monitoring the wear and tear on the building and so the building starts to represent a lesser value than the comparable properties in the area. Conversely, a well maintained property will generally hold it’s value, even if it is older than other comparable properties in the area.
You don’t have to have an award winning garden to create value in a property. But it pays to have a tidy garden area and well kept lawns to ensure that your property maintains a certain level of appeal reflective of the surrounding neighbourhood. If the Valuer has to use a machete to get to the front door and in doing so discovers a new species of butterfly on the way there it’s likely that the property is not going to score highly on the marketability register.
Many owners forget that a valuation is specific for a given period of time (usually 3 months) and that the Valuer’s job is to determine what that property’s value would be in the market at a given time. If your property has a veritable desert as a front lawn while all other properties are presenting nice plush lawns, then your property is going to be less marketable and thus attract a lower value. If it doesn’t attract a lower value, then the rating on marketability (1 being low, 5 being high for example) given by the Valuer will be low and the finance institution using the valuation report may not look favourably upon this.
This factor is reminiscent of many we have already spoken about in this series of articles and essentially refers to how well the property suits the area within which it is located. Does it reflect a typical property for the area?. If your house looks like Windsor Castle in a street full of 3-4 bed standard residential dwellings then you can’t expect that it will attract a value befitting the status of a castle because the demand for the property will be miniscule.
If the street appeal, presentation, and style of the property is similar to other properties in that specific location then the likelihood is that it will reflect a value similar to other properties in that location.
Despite comments to the contrary, Valuers are human too and no one likes to wade through a house that reeks of filth. Valuers are trained to see past the dirt and grime and to take an objective view, and they are very good at it too, but even the best trained Valuer can not be blamed for being subjective when presented with the bloodied front leg of a Kangaroo lying on the porch or the accumulation of 20 years of waste by an Obsessive Compulsive who can’t throw anything out (actual cases). A Valuer will not even notice the state of the floors in a household with 3 small children and their accompanying toys but they will notice the quality of the carpet or floorboards.
It is always wise to talk to a Valuer if you have any doubt about any factors relating to your property. A small portion of your time in consultation could potentially save you a large amount of money in both the short and long term. A Valuer’s experience, based on being in the market constantly, can help you avoid any potential property pitfalls.”
Original Article can be ready here http://www.propellvaluers.com/presentation-and-care.html
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