What do home valuers look for?
If you are a property owner or investor, you can benefit greatly from understanding what property valuers look for when determining your asset’s market value. This knowledge can help you maximise the future and current value of your investment. Property valuers in Queensland are fully trained and qualified in the intricacies of real estate valuation across all property types.
Each valuation is a complex process that involves careful analysis, research and professional judgement. This is informed by years of training and practical experience.
What valuers look for when reviewing buildings depends on factors like:
- property type
- the purpose of the valuation
- the applicable regulations and standards.
Valuers must also consider both tangible and intangible aspects, ranging from the property's physical attributes to broader market conditions. One example is the property's location. Valuation involves reviewing proximity to amenities, transport links, schools and recreational facilities.
Physical attributes may also include finer details such as any unique features, renovations or upgrades that enhance a property's desirability and value. They also consider any potential drawbacks or risks, such as environmental hazards or zoning restrictions.
Next is an assessment of structural integrity, architectural design and overall functionality.
Valuers also study recent sales data and trends in the local area. Factors such as supply and demand, economic indicators and market fluctuations all contribute to the final valuation figure.
What do valuers consider risks?
When conducting residential, commercial or industrial property valuations, valuers must take into various environmental and economic risks that can impact the value of a property.
One of the most obvious considerations is environmental risk. This involves reviewing proximity to the likes of flood zones, bushfire-prone areas, coastal erosion zones or contaminated sites. Properties located in high-risk areas may experience reduced demand, higher insurance premiums or even restrictions on development, leading to decreased value.
This includes the potential impacts of climate change. Rising sea levels, increased frequency of extreme weather events and changing weather patterns can affect a property's viability and desirability. The next most important factor is economic risk.
These include:
- interest rates
- employment and crime levels
- local market conditions.
Changes in infrastructure, zoning regulations or government policies can affect property prices too.
The effect of government policy
Legislation and government policies are crucial considerations for home valuers.
The decisions made by the government regarding regulations, taxes and incentives can profoundly impact the real estate market and the value of properties. This is most impactful in the area of taxation. Policies such as stamp duty, capital gains tax and land tax can influence the demand and affordability of properties. For example, changes in capital gains tax rates may affect investment decisions, potentially influencing property values.
Another key area is planning and infrastructure development. Property value can be influenced by factors such as:
- growth zones
- construction of transport networks
- development of amenities like parks and schools.
Investments in infrastructure projects, such as the expansion of public transportation systems, can increase the desirability of certain locations, leading to higher valuations.
Policies aimed at promoting housing affordability, such as first-home buyer grants or subsidies, can impact property valuations because of increased demand.
Does property type influence what valuers look for?
Property type is one of the first key factors in any valuation. For example, commercial properties require that valuers focus on accessibility, zoning regulations, building size, layout and design, condition, rental income, lease agreements, tenant profiles and potential for future development.
They will also need to assess the financial performance of the property, including the net operating income and capitalisation rate.
This is very different to a residential valuation, where valuers focus on location, size, condition, layout, number of bedrooms and bathrooms and amenities. They also will compile data on recent sales of comparable properties in the area to help determine market value.
Industrial valuations, on the other hand, are more akin to commercial valuations. Unique considerations may include the presence of loading docks, storage areas and manufacturing facilities. Valuers must also assess industry-specific factors, including various specialised equipment or infrastructure requirements.
Apartments vs homes
Valuers do not only consider more traditional labels such as residential versus commercial property. They will adjust their approach based on whether they are reviewing a home or apartment too.
When it comes to apartments, emphasis is placed on views, floor level, amenities and strata information, besides the obvious location, size and condition. Apartments with picturesque landscapes or views of water, greenery or attractive cityscapes tend to command high values.
The floor level is also taken into consideration. Higher floors are generally more desirable and may command a premium. Amenities such as parking spaces, security systems, gyms and swimming pools can also be significant value boosters.
Strata information such as fees, bylaws and management are used to understand the financial and legal aspects of the property.
In contrast, when valuing homes, factors such as land size, building condition, layout, number of rooms, outdoor space and location are given more emphasis. The potential for future development or subdivision can significantly impact the value of your home.
The availability of outdoor space, such as a garden or backyard, is important to many potential buyers. Location remains a crucial factor for both apartments and homes.
For all your real estate valuation questions and concerns, reach out to one of our highly qualified valuers today.