How Does A Bank Determine The Value Of A Property?

How Does A Bank Determine The Value Of A Property?

Home Loan Features

Today’s question is from Mark in Tuart Hill, the question asks – I have recently brought my first home, and the bank I used for my mortgage apparently valued the home I brought. How do banks value property? Do they charge a fee for it?

This is a good question. When you purchase a home, or buy an investment property, the bank will organise a valuation of all the properties that the bank or lender holds as security (a security is the property you are buying, and if you own a current home or homes that you have a mortgage on with the bank, the bank will organise a valuation of those properties as well).

Most banks and lenders generally use external valuation companies to value property they are considering for a mortgage. These companies are separate to the bank or lender and are independent companies. The bank or lender uses the property as security, as when you take a mortgage out, the property is the security used to secure the mortgage or home loan.

When a valuer does a property valuation on a property, they look at many factors, when considering what the property is worth. One of the most important things a valuer will consider is, previous property sales in the suburb you are looking to buy in. The valuer will look at the features of your property, like the number of bedrooms, bathrooms, size of the home, land size, the condition of the property, the types of fittings inside the property and other features, like a pool or air conditioning.

The valuer will then try to compare your property will recent sales in the suburb, and what comparable properties have sold for (generally within the last 3 to 6 months) to get an idea of what your property maybe worth. They will generally try and compare your property with around 4 to 6 recent sales, noting the purchase price of the other properties, and whether they are superior, inferior, or comparable to your property. This will help them with the valuation price of your property.

The valuation can also protect the consumer as well. As the valuation may give you peace of mind, that you haven’t paid to much for the property that you have purchased.

All banks and lenders have different policies when it comes to decide who pays for the valuation. Some will include the valuation in the mortgage application fee, some will charge a valuation fee separate, and depending on the type of home loan you are applying for, some banks wont charge the valuation fee to you at all.

If you would like some more information on how a bank determines the value of a property, please contact Perth Mortgage Broker Group , or call Troy on 0411 229 602, 7 days a week.

 

 

 

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