Can I expect to sell my home for the same amount as my property valuation?
We are often asked this question by our clients because there is a common perception that valuations are conservative estimates which are generally lower the sale price that can be achieved.
But aren’t valuations supposed to be the same as the selling price? A valuation is an estimate of the price a property would sell for if, hypothetically, it had been on the market. So, valuations should be the same as the selling price. However, this hypothetical sale also assumes that the purchaser has acted knowledgeably, prudently, and not compulsively when buying, but in the real world, buyers do occasionally act without adequate market knowledge and their personal circumstances may compel them to buy a property at a price above normal market parameters. So, for this reason there can be occasional discrepancies between a valuation and a sale price. What other reasons explain why valuations are sometimes lower than sale price? There are other possible reasons, some of which we list below:
A rising market
One explanation is that prices can change over the period between the date of valuation and the date the property is sold, and because it is recognised that any market movement impacts their reliability, valuations are only usually valid for 3 months.
A valuation looks backwards and not forwards
A valuation is an assessment reached using comparison with property sales in the recent past. In a very strong market a valuation can fail to keep pace with rapidly rising prices, being based on past sales. This might be another reason why a valuation may be lower than a sale price.
Inaccurate valuations
Time constraints placed on valuers can impact their ability to research the relevant market, potentially resulting in an inaccurate valuation. Many valuers that are providing valuations to the major banks are tasked with completing between 5 to 10 valuations daily, which can pose a challenge to time management.
At Vantage Valuation we ensure that adequate time and resource is given to our valuers to ensure your valuation is accurate and to minimise any variance between the sale price you achieve and our valuation figure. Our valuers do their utmost to understand the market and where it is headed.