While investing in any property one of the most important things to do is to get a house valuation done to identify the market value of the property as per the market standards. This will help you to get better insights about the market and the property that you are investing in.
However, over the years there has been a lot of chaos and confusion going on in the market regarding the house valuation process. Hence, we have drafted this blog to bust all the valuation myths and misconceptions.
Let’s dive in!
Common Valuation Myths
Some of the most common misconceptions about the home valuation process are:
1. Location doesn’t matter
It is one of the biggest valuation myths that the location of your property doesn’t matter. It plays the most important role in deciding the value of the property. Your property’s valuation is highly influenced by the location of your property. Easy and feasible transportation, proximity to basic amenities, and availability of healthcare facilities are some of the factors affecting your home valuation more than anything.
2. Valuation is biassed
Different banks have different processes for valuation. There is usually a third party that does the valuation for different banks, and the bank directly is not involved in the valuation process. Hence, the valuation myths that bank valuations are biassed is not right at all.
These third party partners such as Valocity do the valuation process by identifying and analysing the property based on various market factors and indicators in order to obtain a final value for the property.
3. More bedrooms is more value
Another common house valuation myth is that more bedrooms is going to give you more value for the property. It is true that valuation consists of bedroom value as well, but it is not true that more bedrooms will give you more value. The total floor area is what matters in the end, now here you can have 2 or 3 or even a single bedroom it won’t make a huge difference.
4. Valuation cannot decrease
Once your property valuation is done, it cannot go backwards is another myth that needs to be busted. Based on the market fluctuations, the value of your property can easily go backwards or decrease as per the market standards. For a person who is not looking for a long term investment in real estate, investing while the market is at low and selling when the market is on high is one of the best approaches.
5. Aesthetically pleasing gives more value
Yes, presentation or the condition of the house does have an effect on the house valuation in the final market value. It is advised to keep the designs simple and have light colours to maintain a basic and minimalistic touch. Aesthetics is a highly subjective matter, a person might like bold colours and pay more price for it whereas the other one might not even bother to look at it.
6. Renovation gives more value
Again, the condition of the property plays a major role in the house valuation but getting the renovation with the sole purpose of selling the property is not going to work in your favour. Make the changes and upgrades that are suitable as per the market standards and requirements.
7. Home inspection is not required
A thorough and in-depth property inspection is one of the most important factors and comes under valuation best practices. This provides you with a better understanding and picture of the condition of the property you are investing in.
For this you can hire a professional, a third party such as Valocity that can provide you with an in-depth report and analysis of the property before you make an investment. The online platform of Valocity gives you real time updates and maintains transparency as well for better decision making.
8. Excellent CIBIL score is required
A common approach is that if you have a CIBIL score less than 700 the chances of you getting a loan are low. However, in today’s world it is not that difficult to upscale your CIBIL score. Additionally, there have been various instances where people with low CIBIL scores have also secured good loan amounts based on other factors.
9. Quote a higher prices for bargaining
Bargaining is one such skill that we all seem to have. Hence, it is usually said to quote a higher price in the beginning just so during the bargaining process you can finally get the price you wanted. However, what most people don’t realise is that in this process they are downgrading the property and creating a negative impact on the buyer.
The above listed points are a collection of some of the most common valuation myths. Here are valuation tips that you can use next time you are planning to invest in a property.
Get a proper, in-depth property valuation done as per the market standard via a professional such as Valocity that offers you with a transparent process and online platform for real time updates. Furthermore, it has different platforms for commercial, residential and agricultural properties and can help you get the best market value for the property.
For more information get in touch with the experts at Valocity today.
Frequenlty Asked Questions
What are the limitations of valuation approach?
Limitations of valuation approach is that they don’t allow you to use the direct comparison of economic values that are estimated in different studies and valuation processes.
What is the most common valuation method?
Sales comparison approach, cost approach method, and income capitalisation approach are the most common valuation methods used.
What are the challenges of valuation?
Lack of comparable properties, fluctuations in the market, demand and supply surges, limited appraisal data availability are some of the most common challenges of property valuation.