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Valuers. Valuations. And Your Property.

Valuers. Valuations. And Your PropertyThe property valuation. It’s one of the most important factors in the equation when you want to acquire property.

But…can you rely on a property valuation?

It depends…let me explain the answer by sharing a somewhat crazy story.

A client recently purchased a property in an area I considered a sound investment. In fact, I was so confident, I bought property in the same area as well.

Strangely, the valuations for the two properties fell short of the purchase price.

To check the logic, I obtained 6 other valuations of similar properties with similar values. Licensed valuers completed all the valuations.

You’d think the valuations would be similar but they weren’t even close.

One came in at $20,500 more than the purchase price and another came in a staggering $57,500 short of the purchase price.

Same number of bedrooms and bathrooms. Same sizes. Same locations. All valuations requested for the same purpose: “for mortgage security”. The two highest and lowest valuations above came from two valuers who worked for the same prominent firm; in fact, they both worked in the same office!

What Explains the Wild Discrepancy in Valuations?

A few reasons…

  1. Valuations are traditionally “backward” looking: they look at historic comparable sales personally chosen by the valuer. The valuation rarely takes into account future demand or supply.
  2. Lenders can influence the valuation: they provide the valuation criteria. This can affect the valuation.
  3. With limited comparable sales in this particular area, valuers had to use personal judgement; an objective process became somewhat subjective.
  4. Valuers are human and, when provided with limited data, they tend to be conservative.

How This Affects You

Yes—property valuations are important but they’re just one factor when looking for properties with strong upside potential. If you’re looking to acquire a property, consider areas with:

  • Strong, solid demand and supply fundamentals.
  • Good employment prospects nearby.
  • Good rental yield.

Check these three boxes and you’re on the way to acquiring a solid property with your SMSF.

If you have questions about SMSF property, or a valuation, Go here or call 1300 886 149. You can speak directly with an SMSF property specialist…with no obligation.

To Your Financial Future

Your Friends at SMSF Property Services Australia

P.S. Even if you’ve seen a low valuation for a property and you’re thinking, “this has great upside potential”, speak with us first. We’ll answer your questions about the property, the location, the real upside potential…and more. Go here or call 1300 886 149.

 

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Robert was patient and spent time explaining everything. We felt we could trust him to do a good job. Now some 12 months on, I can say we are very happy with our new investment property, and very thankful we decided to go ahead.

Robert was patient and spent time explaining everything. We felt we could trust him to do a good job. Now some 12 months on, I can say we are very happy with our new investment property, and very thankful we decided to go ahead.

Allison & Chris - Blacktown, NSW

When I first spoke with Allied Investment, my wife and I had been thinking about property investing for a while. We did need someone to help us with advice and guidance in this area. We can highly recommend Robert & Michael from Allied Investment Group if you are looking at buying an investment property.

When I first spoke with Allied Investment, my wife and I had been thinking about property investing for a while. We did need someone to help us with advice and guidance in this area. We can highly recommend Robert & Michael from Allied Investment Group if you are looking at buying an investment property.

Chris & Sam - Holsworthy, NSW
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