When it comes to real estate decisions, the property’s value plays an undeniable and pivotal role. Property valuers are entrusted with the task of:
- determining a property’s true worth
- engaging in data collection
- analysing previous sale history
- and carefully calculating value
Through their meticulous methods, valuers generate an accurate property valuation. The role of a residential property valuer is far from simple, as there may be several significant challenges that arise throughout the valuation process.
Below are 5 challenges that real estate valuers may encounter during the valuation process.
1. Valuation Discrepancies
One of the most prominent challenges faced by our valuers arises when a property owner/borrower expresses dissatisfaction with the valuation figures. This commonly occurs when a mortgage lender deems the property to be insufficient security for a loan.
The valuation amount carries immense weight in determining loan interest rates. That’s why owners may perceive the valuation as lower than expected, leading to what we refer to as the ‘valuation challenge’.
2. Variability in Property Values
A property valuation is inherently subjective, and judgement can vary, even with research, data collection, and calculations. For instance, it's entirely possible for two different valuers to arrive at two distinct values of the same property. The variance in property value is generally narrower when ample property data is available, and market conditions remain stable. However, it may also widen considerably in a fluctuating market environment with insufficient data.
3. Uncertainty in Valuation
Property values are dynamic, influenced by numerous factors, including market conditions and economic stability. Both of which can swing significantly. With this inherent uncertainty, it may present various challenges for a property valuer. Before conducting a property’s value, the valuer must conduct a comprehensive assessment of the current local market conditions and the broader economic stability of the state/country.
4. Data Collection Challenges
Property valuations weigh heavily on the accuracy and reliability of data that has been collected by the valuer through research and previous sales records. However, gathering reliable data can prove challenging at times. Insufficient or inaccurate information can adversely affect property valuations and pose significant challenges for valuers to present a reliable, comprehensive valuation report.
5. Time Pressure
Property valuers often contend with immense time pressure, driven by clients and company expectations. The challenge arises from the unique nature of each property. Finding comparable properties and determining accurate values, requires time and attention to detail. Rushed valuations can lead to errors and unsatisfactory clients.
Working together for accurate valuations
Property valuation is an intricate and challenging task that hinges on carious factors, including geographical location, economic conditions, market trends, and property type. These variables are in constant state of change, needing diligent investigation, comprehensive study, and thorough research by property valuers.
As property owners, there are ways to assist real estate valuers in their work. By collaborating with valuers to locate evidence, gather data, and identify comparables, we can significantly aid in arriving at an accurate fair and time appropriate property valuation.
If you’re seeking dedicated, experienced, and knowledgeable property valuers, Vals QLD have the team for you, please do not hesitate to reach out to us. We are here to provide expert valuation services tailored to your specific needs.