What can help you make millions more by retirement? Better property valuations, Insynergy explains

Property valuations are a critical factor in property investment, often determining the success or failure of your financial goals. Surprisingly, valuations can vary significantly between lenders, sometimes by as much as five to 25 per cent. This difference isn’t trivial; for a property valued at $1,000,000 it could mean a variance of $50,000 to $250,000.

The influence of subjectivity

Why such a substantial gap? Valuations are subjective, influenced by the valuer’s approach. Some are conservative, while others are more optimistic. Understanding this discrepancy is key to maximising your investment potential.

Unlocking investment opportunities

Consider this scenario: You need $50,000 to invest in a new property valued at $500,000. A higher valuation could unlock this equity, allowing you to capitalise on another investment opportunity. If this new property appreciates by just five per cent annually, that’s an extra $25,000 per year or over $500,000 in 20 years.

Now, multiply this potential by several properties over many years, and you’ll realise the impact valuations can have on your retirement savings. Achieving better valuations isn’t just about maximising profits; it’s also about mitigating risk by having extra equity as a buffer.

What factors influence valuations?

One key factor that influences property valuations is the condition and features of the property. Properties that are well-maintained and have desirable features such as modern amenities, good natural light and attractive outdoor spaces tend to receive higher valuations. On the other hand, properties that are in poor condition or have outdated features may receive lower valuations.

Location is another critical factor that affects property valuations. Properties located in desirable suburbs with good access to amenities such as schools, shops and public transport tend to have higher valuations. Whereas properties located in less desirable areas or with poor access to amenities may receive lower valuations.

In addition to these factors, market conditions also play a significant role in property valuations. During periods of high demand and limited supply, property valuations tend to increase. However, during periods of low demand and high supply, property valuations may decrease.

The role of your specialist investment finance broker

Unfortunately, directly approaching lenders for valuations can be time-consuming and may harm your credit rating. This is where an experienced investment finance broker becomes invaluable. They can arrange valuations on behalf of banks without a full loan application and provide insights to achieve better valuations.

How can you improve your property valuation outcomes?

  • Set informed expectations. Research recent sales of similar properties in your area and present this data to the valuer. Polite and confident communication can encourage them to value your property more optimistically.
  • Know your property. After researching similar properties, know the features of your property which may increase its valuation including block size, house size, location, renovations or upgrades. These are all factors considered by a valuer.
  • Get multiple valuations. Different valuers have varying levels of confidence. Your broker or advisor can recommend valuers known for fairer assessments. Aim for at least three valuations to increase your chances of a favourable outcome.

Property valuations are a complex and multifaceted aspect of property investment. By understanding the factors that influence property valuations, you can make informed decisions to maximise your investment returns.

With the right approach and guidance, you can potentially make millions more by retirement while ensuring a safer investment journey. Working with experienced professionals such as a property wealth planner and specialist investment finance brokers can also help you navigate the valuation process and achieve better outcomes for your financial future.

Richard Sheppard is the CEO and founder of inSynergy Property Wealth Advisory. inSynergy provides a broad range of professional services designed to assist with all aspects of property investment. Phone 1300 425 595 or visit insynergy.net.au