Frequently Asked Questions

What is a property valuation?

A property valuation is a certified legal document that aims to determine the fair market value, either at a current market or retrospective date, of any subject property. As such, a property valuation can be completed for any residential, commercial, or industrial property type for a variety of purposes.

A property valuation can only be completed by a certified valuer with the industry expertise to research and objectively analyse the subject property and provide an accurate value free from bias. Property valuations are eligible for submission to governing agencies, law courts, and to the State Revenue Office to provide a transparent, objective determination of value.

When would you need a licenced property valuer?

In order to obtain a certified valuation report required for any kind of private use, legal procedure, or compliance measures, you will need to a licenced property valuer to assess the subject property

As such, a licenced property valuer is needed to adequately research and provide a comprehensive analysis without bias for a variety of purposes. A licenced property valuer is able to complete rigorous due diligence to ensure the valuation meets any requirements. In turn, a property valuer provides reliable, sound advice to provide greater certainty and an accurate property value.

What are the difference property valuation methods?

As outlined by the Australian Property Institute (API), certified valuers will use three main methodologies in their property valuation reports to determine value. These include:

• Direct Comparison Methodology: this one of the most common approaches in determining value. The valuer will complete a direct comparison of the subject property with similar properties in the local area to determine value.
• The Summation Approach: this methodology is relied upon by API certified valuers as a secondary check. It involves calculating the replacement cost value of improvements made to the property, then depreciating this value by age. The depreciated value will then be calculated against the underlying land value to reach an overall value of the property.
• The Capitalisation of Net Income: this methodology is reserved for commercial properties and can be used in conjunction to the direct comparation and summation approaches. The property valuation will be based on the net rental income, which will be capitalised at a rate taken from comparable sales in the local area to calculate the subject property’s fair market value.

What does it take to become an API qualified property valuer?

In order to become an API qualified property valuer, one must undergo at least six years of tertiary education and industry practice before being certified to undergo valuations. As such, a property valuer will need to complete a tertiary course in property via the Australian Property Institute before completing two years of industry practice via a traineeship. From here, a property valuer will need to sit a final interview before being qualified.

Through this rigorous training, an API qualified property valuer has the expertise to provide valuable, sound advice on valuing real property. An API property valuer is also an expert in their local property market with a unique insight into any subject property.

What does a property valuer look for at an inspection?

When conducting an inspection, a property valuer will analyse the details of the subject property such as overall building condition, orientation to the street, and any fixtures and features. A property valuer will also look at the property’s location and take into account its proximity to public amenities and infrastructure while looking into any environmental risk factors.

As such, an inspection allows the property valuer to gain a clearer understanding of the property and the surrounding area before conducting further research using selected property databases. From here, the property valuer can apply their knowledge of the property and the local property market to provide an accurate fair market value.

What is the difference between a retrospective and a current market property valuation?

Both a current market and retrospective property valuations aim to determine the fair market value of any subject property. However, a retrospective property valuation will provide the accurate market value of the property at a chosen date in the past. A current market property valuation on the other hand, provides an accurate determination of value in its current state.

A current market property valuation is only valid for 90 days from the date of inspection, while a retrospective property valuation is useful for probate, taxation, and government applications. As such, the certified valuer will utilise the same methodologies for either purpose the subject property’s accurate value.

What is the difference between a bank valuer and an independent property valuer?

A bank valuer works within the interest of the lender to ascertain loan security. As such, a bank valuer will hold a pre-emptive conflict of interest of wanting to minimise risk and will likely prompt for a more conservative value should the loan be defaulted.

One the hand, an independent property valuer can perform a certified valuation for mortgage security purposes based on objective research and data to provide an accurate value. As such, a property valuer will provide an independent valuation based on expert industry knowledge without any conflict of interest.

Real estate appraisals vs. certified property valuation reports

A real estate appraisal will provide an estimation of value based on what the subject property is believed can be sold for. A certified property valuation, on the other hand, guarantees a professionally detailed document completed by an independent valuer.

A real estate appraisal is not a legal document and therefore cannot be used in any kind of formal capacity nor should it be accepted as an accurate determination of value. In turn, real estate appraisals also tend to have a conflict of interest in wanting to list the property for sale.

On the other hand, a property valuation is completed by an industry expert in valuing real property. As such, this will provide an accurate, transparent report without any conflict of interest, and can be used for pre-sale/pre-purchase advice purposes.