What would you do if you wanted to find out what your property is worth in today’s market?
Would you ask for an appraisal or do you get a valuation?
They may sound like they are the same but they’re not. Do you know the difference?
A valuation can only be conducted by a certified valuer, one who has completed the prescribed educational course and are qualified to perform the task of valuing property.
An appraisal on the other hand is simply an estimate of a property’s market value, which is what you’ll generally get when you ask a real estate agent to price your home.
Appraisals by real estate agents are just that. It’s their estimate of the property’s value in the current market. The price the agent quotes you is simply their opinion of the market price of your home and since it’s not legally binding it doesn’t have to withstand the scrutiny of being accurate.
This explains why homeowners are often quoted different prices when they call agents in for an appraisal. Vendors are then faced with the dilemma of not knowing which agent’s price estimate to believe.
Real Estate agents should have a good knowledge of the sales in their local area and should be in a position of accurately estimating the likely selling price by making comparisons with comparable recent sales.
So why do agents often differ in their price estimate?
In their attempt to please the vendor and in order to increase their chance of winning the listing, agents can often be over-optimistic with their price estimate.
Engaging a qualified valuer for a valuation on the other hand will cost you money but it could be a worthwhile investment as it gives you an independent, unbiased and accurate valuation that you can legally rely upon.
A written independent valuation can be a valuable tool, particularly in the current market, when negotiating with a buyer who may be trying to buy the property at a lower price.
A valuation can also provide you with peace of mind. Having an independent valuation makes your job of selling your home a little easier, as you are able to compare any offers you receive with the written valuation.
Written by Paul Kounnas.