How does a professional valuer assess what your property is worth?

Figuring out what your property is worth can be confusing. When the market is on an upward swing, or when conditions change quickly (we’re looking at you, Covid), getting an accurate dollar figure of what your property is worth is really important. Especially if you’re looking to sell, or refinance a home loan. 

There’s always going to be a wide range of value variations and estimations for your property, depending on whether you use an online estimation tool, or get an appraisal from an agent - but the one that stands up when you’re looking to refinance or release equity in a property, is a professional valuation. 

If you’re a little confused about the difference between an appraisal and a professional valuation, we don’t blame you. It’s really common. According to Brett Smith, Director of Sydney-based property valuation company Mclennan Steege Smith Property Valuations, the difference between the two is a question he gets asked a lot when attending physical inspections of properties for valuations.

“I suppose the easiest way to explain it is that an agent is always looking for the best case scenario; a projection of what’s the best possible outcome, and most important, that’s exactly what you want an agent to do - to get you the best possible price.”

“As a valuer, we’ll base value on factual information, on the recent sales of similar to broadly similar properties within the local area; from there we’ll make our assessment. We won’t project forward, we won’t say, ‘you know, I think on a bright sunny day, if you get the right buyer, you’ll get this number,’” he says. 

According to Mr Smith, an agent and valuer are equally important during the selling process. 

“Agents are doing their job correctly, and valuers are saying, ‘in the court of law, because the [comparable] house down the road sold for $X, and the one up the road sold for $X, [this property’s value] will be sitting between those, and won’t go beyond that,” he says. 

It made us curious. If you’re a seller, looking to put your home on the market, what can actually increase the figure of a property’s professional valuation? And what does a valuer take into account when coming up with that figure?

Helpful tool: start with an online estimate to get an idea of what your home is worth

What does a valuer look at?

As Mr Smith mentioned above, the most common way to assess the value of a property is through direct comparison, that is, comparing the property to recent sales of similar properties in the area. For example, that doesn’t just mean comparing a handful of two bedroom units with one another; according to Mr Smith, if the unit being valued is in a textural red brick building, then you’d compare it with other textural 70s red brick properties that have sold nearby. 

But in addition, a valuer will also be making judgments about the property based on its features and condition. According to a recent article on Choice, location has, by and large, the biggest bearing on value. However, valuers will also look at:

• Numbers of beds, bathrooms and car spots
• Zoning, heritage restrictions and development potential
• Land size and topography
• Whether the property has a view
• Whether the property is impacted by noise from things like flight paths and main roads
• Quality of the dwelling including fittings, materials used in construction, renovations and any defects
• Design and layout of the property
• Site improvements including fencing, driveway, landscaping, pool, shed, tennis courts, pathways, studios etc
• Access to amenities and public transport
• And any unique characteristics that could affect value

 Just like an investigator, Mr Smith says, it's all about having evidence. Source: McSS Property Valuations.

How can you make a valuation higher?

It’s something you might be wondering about. Especially if you’re hoping to improve your valuation in order to extract equity to invest. According to Mr Smith, the most important thing is ongoing maintenance - not a big, rushed clean-up when you’re just about to get your property valued.

“If the carpet gets a tear, make-good that problem. If there’s a kitchen door that starts swinging or falls off, get it repaired. Ongoing maintenance is a lot easier to manage than somebody doing 12-20 repairs in three years time.”

“It’s more cost-effective, and ongoing maintenance over time will help the value of your home. It makes your home a preferred option to the house that’s a bit unkempt down the road,” he says.

And of course, valuers pay plenty of attention to the condition of kitchens and bathrooms, the most expensive rooms in a property. 

“We might say, ‘yep, this property might have a 1960s kitchen, but the bathroom has been recently updated.’ Even if it was updated 10 years ago, it still looks better than a bathroom with a pink basin and black and pink tiles from the 1960s,” he says. 

“They’re the big-ticket items that will add the most value. Small ticket items include ongoing maintenance, fresh carpet, fresh paint, or new floorboards; whatever you choose to do, they are ways of keeping a home looking reasonably modern, neat and clean.”

Even smaller cosmetic renovations, like painting old kitchen cupboards, or using tile paint, could make a difference. But Smith warns that a purchaser will always look closely at the quality of the work, and while tile paint isn’t intended to be a long-term solution, what it does do is show a purchaser or valuer the possibility of what the property could look like if a full renovation was undertaken.

Besides ongoing maintenance, major renovations and cosmetic renovations, what can a homeowner do to prepare for the day of valuation? The simple things, like tidying, cleaning and presenting the property in the best possible light.

“General tidiness and minimising personal effects, so the valuer can see a clear, big space. It’s an easy short-term thing to do if a valuer is coming through your property in one or two days time,” says Mr Smith. 

Don’t underestimate your curb appeal

There’s a reason why we recommend that vendors spruce up the exterior of their homes prior to sale to boost their street appeal, and when it comes to a valuation, this is no different. 

“I think sometimes we really underrate our street presence; just general things, like painting and maintaining eaves, gutters and downpipes… your gardens, your front yard. Street presence is a very important thing,” says Mr Smith. 

“Where it be a valuer or buyer, if they walk in and go, ‘this is a nice and well-looked after home’ then they’ve got confidence that other people will think the same thing.”

This doesn’t just apply to houses either, strata complexes with tidy and attractive gardens will generally be considered more valuable as well. 

Does your property need a bit of work? Here’s a list of some things you can do

1. If you’re looking to spend a decent amount of money to improve a tired home, focus your budget on bathrooms or kitchens
2. Improve the curb appeal of your home, which includes pressure cleaning, replacing old letterboxes, repairing any cracks or chipped paint, and ensuring your garden is well-groomed
3. Repair any superficial defects such as squeaky doors, dripping taps, mould damage, peeling paint, dirty grout and cracked tiles
4. Update light fittings, light switches and tap fixtures
5. Ensure you make the most of outdoor space - if you have a deck with nothing on it, use the space wisely by creating another ‘living zone’ with some tasteful outdoor furniture
6. Replace carpets or polish floorboards
7. Make sure your property looks light, roomy and bright - so that means: decluttering, using light-reflecting colours and making sure your furniture doesn’t overcrowd the room
8. Just like you would at an open home, light a candle or use a diffuser to make sure your home smells nothing but lovely

What if you get a valuation that you aren’t happy with?

Sometimes a valuation will come in lower than expected. But it’s important to know that a property valuer has zero vested interest in the value of your property, or whether a loan you have applied for ends up being progressed. While it’s very rare for a valuer to get it wrong, if you aren’t satisfied you can:

1. Request a re-assessment providing documentation around comparable properties in the area, and before and after photos of any major renovations you’ve done.
2. Cancel your loan application and try your luck with another lender who may use a different valuer - be sure to not just apply for loans here, there and everywhere, as this will affect your credit score. You can request a valuation prior to applying for a loan.