Many legal transactions involving a property can only be initiated or completed when there is a document providing an accurately evaluated value of the house. Are you searching for comprehensive information about what estimating a property would involve? Read on to have all your questions answered.
The estimated value of a house is a quotation of how much your property is worth, including the house itself and the land. To arrive at the estimated value of a property, a number of factors are put into consideration, such as the location and condition of the property.
Property valuations are required in any transaction because every house is unique and cannot be placed on a uniform pedestal as all other properties. This is especially so because the condition of a house may differ significantly from that of similar houses within the same location.
Generally, property valuation reports are used to settle divorces, estates, taxation, and other such legal matters. Also, the value of a house must be estimated to determine a mortgage loan for a property. Lenders base mortgage loans on the estimated value of a property determined after a property valuation. Often, a lender would only use a valuation performed by an expert they approve themselves.
Property owners need to know the value of their property in order to determine the right price to put on their house when they want to sell or rent it out. Likewise, buyers need to be sure they are not paying a much higher price for a property that is worth less than the asking price.
Another reason a property owner may want to estimate the value of their home is to help them decide what improvements to make to the property if they’re interested in raising its value.
One of the most important determinants in estimating the value of a house is the location. However, location may not result in a significant change in the value of a property since a building cannot be physically moved to a different area. This may not apply in cases where there have been significant developments made in an area that have improved the appeal of the locale. Similarly, in areas that have become less desirable perhaps as a result of increase in crime rate or natural disaster, properties will most likely drop in value.
In cases where the overall conditions of a location have remained relatively unchanged, it’s the upgrades that have been made to the property that can change its value. For instance, adding luxury features such as a swimming pool will raise the value of a property.
Different sources may provide widely different figures for the value of a house. Many websites offer free online property valuation tools to determine the value of a house, based on a number of factors. Figures provided by online tools will not be accepted for use in any legal transactions and are only useful if you want a general idea of what a property is worth.
For property owners who need to set an asking price for their house, a local property expert may be called on to visit the house and conduct a proper valuation. Lenders also use experts to perform a valuation to before they offer a mortgage loan.
Online house valuation tools work by using software that compares the values of similar properties based on a number of different criteria. Some calculators determine the value of a house using the location of the property, the year it was built, and the type of building. Other tools claim to estimate the value of a house based on the condition when the owner bought it, the size of the house, the number of bedrooms, and the time of the year you intend to move. There are also tools that include factors such as whether or not there’s a garden, as well as the number of bathrooms.
Note that online property valuation tools don’t take into account the state of repair or any improvements or modifications made to the house.
No. A valuation only provides the market value of a property while a survey provides a general guidance on structural problems, state of repair, and other conditions that may influence the decision to buy, including the valuation.
Whether a buyers ends up purchasing a house or not, they are required to pay for the valuation of the property before the lender will offer a loan. There are no fixed prices as the cost of valuation will depend on the value of the property and will differ from one lender to another. For a £100,000 property, valuation may cost anywhere between £175 and £280, while the fee rises with the value of the house. Many lenders now forgo this fee and perform free valuations.
There are other informal ways to estimate the value of a house without using an online property valuation tool, however, note that these will not be accepted by a mortgage lender or any other official channels. Nonetheless, it can be useful to have an idea of what your property is worth before you need to go to an expert.
One way is to visit a local estate agent or broker to see what properties they have for sale that are similar to yours. Find out what the asking prices are as well as how much houses like yours have sold for in the past. Another way is to speak to your neighbours when you attend ‘property tax’ meetings, if your neighbourhood does anything like that.