How does a house get valued?

A property valuation is a formal process conducted by an accredited valuer to establish the value of a property. The report generated via this valuation is a legal document and is used for a range of purposes.  

The most common use is for banks when deciding whether to approve your mortgage or refinancing application. They are also used to value a deceased person’s estate. As a legal document, a property valuation differs from a property or house appraisal.  

If you’re wondering how a house appraisal works, it’s typically conducted by a real estate agent rather than an accredited valuer. The agent uses their knowledge of the local property market to provide you with an estimate of how much a house might be worth. It isn’t legally binding, so it can’t be used at the bank or to get finance but will likely be used as a guide when selling your property.  

On the other hand, valuers are trained to look at several different aspects of a property before determining its value. These may include:

Property size 

This is among the most important aspects that determine the value of a property: a bigger property will usually be valued higher than a smaller one. The value of a property includes both the land it’s built on and the house itself.  

This means that a small house could have a  higher valuation simply because it’s on a larger block of land than a larger house on a smaller block. If the blocks are of a similar size, the larger house would likely be valued higher. Apartments or similar properties that share land with others will likely have a lower value than any house. When estimating the value of the land a house is built on, valuers will compare it to similarly sized blocks recently sold in the area.

Layout and condition of the property

Size isn’t the only important thing, though. Valuers are also looking at the design, construction and maintenance of the property. For example, a five-bedroom house with minimal floor space and only one bathroom may not have as high a valuation as one with multiple bathrooms and more living space.  

Also, if the house has been renovated, the valuers will review how the renovations have been completed and assess if they actually add value. On the other hand, a smaller house that was well built, planned and maintained could improve its valuation. It might also be worth paying special attention to the kitchen. A good-sized kitchen with quality fittings and appliances can make a big difference to a valuation. 

Valuers will review the property’s condition via photos and online information, and a physical inspection. How you present the property will likely impact the valuation so it might be worth decluttering where possible, so that the valuer can see the property in the best possible light. A clean and well-maintained property indicates that the owners take care of it, which may impact how the valuer views the property. 

Parking and local amenities

Do all the houses in your area have off-street parking? If so, your valuation could be affected if your house doesn’t. On the other hand, if you live in a busy urban area where parking is hard to come by, the value of your home can go up if you have a parking spot.  

Local amenities also play an important part. How close is your house to schools, shopping centres, public transport, and healthcare? A house that is close to these kinds of amenities will likely do better in its valuation than one that is further away. If it’s located in a good school district, for instance, it’ll likely add value to the property. 

Townhouses with access to facilities such as sufficient parking, a pool, lift and other amenities, can be highly regarded in a valuation, as not all houses have these.