October 09, 2014
It’s rare to borrow money these days without the bank needing to know the current market value of the properties they are holding, or will hold, as security. There are a number of things that can be done to get the best valuation and increase the lending capacity of your clients. This information has been prepared to help your clients obtain the best property valuation, ensuring they get the most equity available to assist in their journey of growing their wealth via property.
1) Tidy, declutter & repair: Valuers are trained to look through the mess and value the bricks and mortar, but, in my mind, a well presented property will value better. If the valuer is coming this week, you can’t perform miracles but there are still some actions you can take to maximise your valuation. Tidying the yard and de-cluttering the house will have an impact. If the valuer needs to hack through front yard growth to make it to the door it makes it difficult for the valuer to see the property’s full potential. And it doesn’t help if the valuer can’t comment on floor coverings because he can’t see through the toys, dirty clothes and magazines. Fix those small things you’ve been meaning to do for months: re-attach the kitchen cupboard door, straighten the blinds and fix the towel rail. All small fixes that will make a difference to the valuer’s first impression.
To improve the value in the longer term – if your property has no covered outdoor area or undercover car accommodation, this is a good place to start.
2) Provide building plans: Provide the valuer with a copy of the building plans if you have them available. Valuers need to know the living areas, outdoor areas and car accommodation areas for their calculations. The valuer will need to measure up the property, but if plans are available it improves accuracy and saves time. Ensure the valuer takes into consideration every square metre of your property.
3) Provide an estimate of value: So the valuer can come prepared with research of comparable sales in the area, provide the valuer with a rough estimate of value prior to his/her arrival. The valuer needs to conduct considerable research prior to inspecting the property. Having a rough estimate saves the valuer searching for $300 000 properties if your property is going to value in the $900,000 range. Save the valuer time and research by providing the best estimate you can.
4) Provide immediate recent sales (if you know of any): Advise the valuer of any very recent sales you are aware of in your immediate area e.g. a neighbouring property. This is because the details of properties recently sold in the area, are often not available on the central property databases until three months after the sale has settled. If you are aware of a sale in the area the valuer can then make further investigations. The house four doors up may have sold two months ago. The sale is not yet on the relevant databases and the For Sale sign has been removed. The valuer has no way of knowing about this sale.
Also, the listing price of a property in the area is irrelevant to the valuer. A property rarely sells for what it is listed at and so the listing price cannot be considered as sales evidence.
5) Make a list of hard to see features: Sometimes clients will come back saying the underground water tank, the underfloor heating or the new solar panels weren’t listed in the report. Prepare a list of the hard to see features of the property so the valuer can take all of this into consideration.
6) Recent renovations: Advise the valuer of any significant renovations conducted since purchasing the property and the approximate cost of those renovations. This will explain why your estimate is now $700K when you paid $500K twelve months prior. The valuer will take these renovations into consideration.
7) Finish any renovations: To get the best valuation ensure you finish any renovations. Once you’ve pulled out the kitchen and bathroom, the house is worth considerably less as very few people want to purchase a property in that condition. Don’t start the renovations then go to the bank to get more money.
8) If tenanted – advise the property manager that the property is to be valued. Often property managers demand written notice from the owner before allowing a valuer access to the property and if the property manager isn’t aware of the valuation this can slow the process somewhat.
9) Tie up the dog – One more than one occasion I’ve opened a gate and the dog has run out. I’ve then spent half an hour chasing this dog up and down the street. The dog was having a great time and the kids next door thought it was hilarious.
10) Don’t ask the valuer for the figure at the inspection - he can’t tell you. He still needs to conduct more research and visit the sales in the area. Also, if the valuation has been requested by the bank, then we are only permitted to provide information to the instructing party, which is the bank.
What’s really important is that you put your best case forward before the valuation. Once the valuation is finalised and submitted to the bank, valuers are hesitant to change their reports. Don’t forget, you may have information to support your case that the valuer may not have access to.