What Do They Look For in a House Valuation?
Whenever one takes out a mortgage in Australia, lenders request a property valuation. This aids them in estimating the property’s value, lessening their risk in case any problem arises with the loan.
Valuers – who are professionally qualified – assess a range of factors in deciding a property’s market value. However, what exactly do they search for?
In this article, we unscramble the most important factors that have an impact on a valuer’s conclusion, so that you can understand and know in advance and best prepare for it.
1. Location, Location, Location
Valuers first and most prominently assess a property’s environment. Location is one of real estate’s biggest value drivers in Australia. Any property in a preferred location with access to public transport, schools, shops, and such conveniences will have a high valuation placed on it.
Customers pay a premium for an easier location near city centres and seaside locations because they value ease and lifestyle.
A valuer will assess the suburb’s:
- Reputation
- Historical Growth Performance
- Nearby Government Development Planning
- Any Future Contribution Towards Development
If a suburb recently improved, say, with new infrastructure, retail development, etc., then a positive valuation will follow in most cases. On the other hand, an inconvenient location, one with high crime and fewer conveniences, can shave off overall value.
Action point: When speaking with potential lenders and valuers, mention your property’s locational advantages. For example, a new planned tram stop, a new big store, or similar positive developments in your locality can boost both short-term and long-term property values.
2. Land Size and Zoning
Land size affects a home’s potential for future development and expansions. In Australia, bigger blocks are often prized for their flexibility. Some buyers want to add a granny flat, subdivide, or create an outdoor entertaining space. Valuers factor that in when deciding the property’s worth.
Zoning restrictions also matter. Different council zones permit different kinds of buildings. A property in a residential growth zone, for instance, might command a higher valuation because it offers more options for dual occupancy or multi-unit development.
Action point: Verify your council’s zoning guidelines and note any upcoming changes. If your property has potential for further building, make sure the valuer knows. This detail can boost your valuation if a future buyer sees potential beyond the existing structure.
3. Property Condition
Valuers walk through the property – both inside and outside – to gauge its condition. They note structural issues, visible defects, and overall maintenance. Big red flags include cracks in the walls, leaks, faulty wiring, and pest damage. If the property appears poorly maintained, valuers often subtract from the overall estimate.
Simple cosmetic updates, like fresh paint, polished floors, or tidy landscaping, can improve first impressions.
While a value doesn’t dive deep into your home’s style preferences, they do consider the general presentation. A neat, well-cared-for property sends a strong signal that you’ve invested time and resources into maintaining it.
Action point: Address any minor repairs before the valuation. Patch up cracks, fix leaks, trim the garden, and ensure everything looks clean and well-maintained. These basic steps can make a surprising difference.
4. Age and Building Style
Australian homes vary from classic Queenslanders and Federation cottages to modern builds and mid-century designs. The property’s age and architectural style influence its value in different ways.
Heritage-listed homes can command a high price if they’ve been well-preserved and sit in a sought-after location. However, they can also carry extra maintenance or renovation constraints, which might deter some buyers.
Contemporary homes with open-plan layouts, energy-efficient features, and quality finishes often score highly because they require fewer updates.
A value assesses how well an older property competes with more modern offerings. If your older home has a unique character and has been renovated to meet current standards, that often enhances its appeal.
Action point: Emphasize any upgrades that modernize an older home. If you’ve updated wiring, installed energy-efficient windows, or redone the kitchen, mention these features. They show that the property aligns with modern living standards.
5. Size and Configuration
Valuers look at the total floor area and how the living spaces flow. Open-plan layouts that make efficient use of space tend to hold more value than cramped, segmented designs. They also consider bedroom and bathroom counts.
In Australian markets, homes with three or more bedrooms often attract families and command a stronger resale value.
Functional spaces, such as a dedicated laundry room or secure parking, can add value. Storage solutions, flexible layouts, and multipurpose areas – like a study nook – can also make a difference. A valuer isn’t there to judge your furniture or décor, but they pay attention to whether the home’s design suits its size and meets modern buyer preferences.
Action point: If you’ve made clever adjustments to increase usable space – like adding a built-in wardrobe or converting a spare room into a home office – point that out. These improvements can set your property apart from others of similar size.
6. Renovation and Addings
Valuers weigh the impact of renovations on a property’s market worth. High-quality kitchen and bathroom upgrades often produce the biggest boosts because these rooms cost the most to remodel.
Adding a second bathroom, refreshing appliances, or installing custom cabinetry can elevate a property’s value beyond others in the same neighbourhood.
Valuers also assess the materials used and the workmanship involved. A half-finished or poor-quality renovation may hinder a property’s value more than no renovation at all.
Action point: Keep records of renovation costs, receipts, and any relevant warranties. These documents back up your claim that the upgrades are valuable and high quality. Valuers appreciate clear evidence of improvements, and so do potential buyers.
7. Outdoor Spaces and Amenities
Outdoor living is a big draw in Australia and for family buyers and social butterflies in general. Outdoor decking, patios, a tidy garden, and a pool and spa can make a property’s value in its value perceived. That being said, pools have maintenance expenses, and not everyone wants one.
Valuers weigh the positives (lifestyle, aesthetics) against the possible downsides (ongoing upkeep, safety regulations).
Sheds, garages, and carports also matter, especially if street parking is limited. Secure off-street parking can sometimes raise a valuation, particularly in urban areas where space is at a premium.
Action point: Highlight the functionality of your outdoor space. If you have a well-maintained lawn, fruit trees, or an undercover entertaining area, make sure the valuer sees their appeal.
8. Comparable Sales
A valuer doesn’t just rely on your property in isolation. They also check recent sales of comparable homes in your area. They look for similarities in land size, property features, condition, and layout. By matching up several “like-for-like” sales, they arrive at a fair market estimate.
Action point: Stay informed about what’s selling in your area and for how much. If you know of a property similar to yours that sold for a strong price, let the valuer know. They’ll decide how relevant that sale is, but it can help them interpret the local market.
Conclusion
Valuers evaluate a residence using location, property size, property state, improvements, the general state of the marketplace, and current similar sales. They combine these factors to form a well-researched estimate of market value.
There’s no controlling for everything – like your marketplace’s overall state of affairs, for instance, and a range of sales in your region recently – but with your property in tip-top shape and presented in its best form, your valuer will have an easier job in estimating your property’s value.
Remember, if you’re interested in securing a mortgage for a home or property investment – whether in Australia or overseas – don’t hesitate to use Upscore’s FinancePassport.