Determining the value of a property can be a fairly difficult calculation as there is a lot to take into consideration. The type of property, quality of the dwelling on the property, recent sales and where the property is located. With the market moving so quickly as it has been in the last few years, getting a good read on property values has been fairly difficult.
When do you need to get a valuation?
There are a few types of valuations and times when you might need to get them done.
1. When you have a less than 20% deposit
Often when you go to buy your first home, getting to a full 20% deposit can be a bit of hard work and so the banks have provisions for people to buy with a lower deposit (normally 10% minimum) and when you do this, you will need a registered valuation. This is to make sure that what you are paying for the property is what it is worth. Mainly the banks require this to protect themselves (and you) from fluctuations in house prices meaning that you may have a home loan that is more than the value of your house.
2. When you are buying as a private sale
Buying privately often happens when you are buying off friends or family and so a real estate agent isn't involved or maybe you are buying from someone online who has decided to not use a real estate agent. This may also happen if you are buying into a property already owned by family or a partner for example. The reason for wanting a registered valuation here is to confirm the value so that everyone is getting a fair deal and also to make sure there is nothing weird going on.
3. When you are building a new home
When you're building a new home, the bank wants to confirm that what you are building is worth the amount you are paying for it. They want to make sure that the specifications are correct (quality of the build), the land is worth what you've paid for it, and that once the build is completed, it will be worth what you are paying for it (at least). We need to get valuations before the build begins and then usually again at the end of the build to prove that you built what you said was going to be built.
With turn key builds where you pay a deposit and then the rest at the end of the build, a valuation at the end is generally fine.
How to get a registered valuation ordered?
The banking system has decided that getting independent valuations to do valuations is more objective and gives more consistency than just allowing buyers to choose their own valuation. This has meant that two systems have been developed (Valocity and CoreLogic) where all the bank require valuations to be ordered through. Your mortgage advisor or bank will order this for you at your cost and then a valuer will be assigned to do your valuation.
Valuations will often take 5 - 7 days so getting this underway early is important.
How much does a valuation cost?
For normal registered valuations we are typically seeing costs of around $800 - $1200. For more complex properties or larger properties, we are seeing them be slightly higher but that is done on a case by case basis.
If we need to get an urgent valuation done (quicker than 5 days), then we are generally seeing an additional $200 fee.
Touch base with the team at My Mortgage and we can get a valuation ordered for you if you need it and then make a plan to get your new lending associated sorted out.