Even though these two terms get thrown around a lot, it’s important to know the difference between a property appraisal and a property valuation before you need one.
These two terms are often used interchangeably, but there are actually a few big differences between a property valuation and a real estate appraisal (sometimes called an evaluation, just to make things tricky). Here’s a quick breakdown so you know everything you need to find out your home’s worth.
An appraisal is usually a service offered free by your real estate agent. This is a subjective estimate based on market value, and similar properties in the area that have sold in the past 3-6 months.
On the other hand, a valuation can only be carried out by a qualified valuer who will charge a fee, and involves a report that can be used for legal purposes.
A property appraisal will typically take into consideration elements of the home including ‘street appeal’ (what it looks like from the street), the property’s interior and exterior, and size of the land. Things that add value to the property such as ducted air conditioning, a recently updated kitchen, or multiple car spaces will also be considered. The real estate agent will compare these factors to similar homes that have recently sold in the area and give you an estimated figure.
After a valuer inspects the property in person, they’ll compile a valuation report containing all the details of the property. The valuer will report on local amenities, the condition of the property, the estimated future life of the property, any renovations that have been conducted, and many other details that denote the definitive value of the property.
When do you need a real estate appraisal?Because appraisals are an estimate rather than a definitive value, they’re best to gauge the local market when planning to sell or rent out your property.
You should engage a qualified property valuer when a definitive value is needed. For example things like property settlements, applying for finance, or dispute resolutions.
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