What is the purpose of a property valuation?
A property valuation is an estimate of your property’s value. The value is concluded by an assessment of your home, where the estate agent will take multiple factors into consideration to determine how much it is worth at the time of the valuation. Property valuations are most commonly used by sellers looking to sell their home, or by landlords that want to put their rental properties on the market.
If you’re wanting to sell your home, a valuation will help you to determine what your initial asking price will be when the property goes to market. After all, if your asking price is too low, you’ll lose money. It may generate interest from potential buyers, but you will not sell your house for the price it deserves. This can then lower your budget for a new home in the future. On the other hand, if you advertise your property at a price that is too high, you’ll probably gain very little interest from potential buyers. An accurate valuation will ensure that your asking price is fair and representative of the property’s true value. It will also inform your budget for a new home – learning how much profit you’ll make from your home will inform how much money you can afford to spend on a new property.
As for landlords, having a valuation conducted can help them to find out how much their investment is worth. By doing so, they can make sure that the rental costs they advertise to potential tenants on the rental market are fair and accurate. This will attract the right tenants to the property and, again, will ensure that the landlord doesn’t miss out by valuing the property too high or too low.
Valuations can also be useful for people that are wanting to insure their property or refinance it. Finding out the value of your home prior to insuring it will help you to determine the level of cover you need, based on your property’s value. If you give your insurer a value that is too high, you will be paying more than is necessary for your insurance. If you give them an estimated value that is too low, you risk not being adequately covered.
As for remortgaging and refinancing your property, a valuation provides accurate information about the value of your home that will only work in your favour. By providing this accurate information, you’re more likely to receive better support from mortgage lenders, or any other financial support you need. A mortgage lender may wish to carry out a valuation, simply to check that the property is worth the amount you claim it to be, but this will only be for their use and will not be as detailed as a valuation carried out by an estate agent.