When dealing with real estate comps, property deals and the like, you will inevitably come across the need for a valuation of a property. But what exactly is a valuation report? Glad you asked!!
A valuation report evaluates the property in question. The report helps a buyer as well as the seller in assessing the value of the property. Generally, it is prepared at the request of the buyer to assess the true value of a property. This helps in negotiating the price to be paid.
The report is normally requested by a bank that funds the property purchase. If you are obtaining a mortgage loan, the bank will require a valuation by one of their panel surveyors. This is to ensure that if the mortgage is unpaid the outstanding amount is covered. A lender will also require an appraisal when one offers property as a security for a loan. This is because he will want to make sure the property will sell for at least the amount of money he is lending.
Valuation report indicates if the purchase price is reasonable and whether there are any major defects as identified by the valuer. A real estate appraisal helps establish a property’s market value – the likely sales price it would bring if offered in an open and competitive real estate market.
Okay, now that you are armed with the knowledge of exactly what a valuation report is and the benefits it offers, be certain to add it to your check list when you are working property deals.