Irrespectively of either you are looking to buy a new home, motivated to sell off the current property or just having to do anything that is property related, the concern of property valuation will be likely most to recur and will be need to be seriously taken. In any case, it is essential to get an indicative number on the worth of your property. This will ensure that you will be attaining the best out of the investment as well as how much the market is offering.
By having the valuation of a property properly done, both the sellers and the buyers will able be in better positions when it comes to the negotiation stages.
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Back to the fundamentals: How does Property Valuation in Singapore Works?
A property valuation is essentially the estimation of on the worth of a property. This report will be an important portion of a property transaction as it will play a vital role in during negotiations between buyers and sellers.
Generally, property valuation comes in 2 types which are the actual valuation and the indicative valuation. The indicative valuation is simple estimation on the worth of the property. It is derived usually from taking into considerations of the price averaging from the number of properties sold and bought within the same vicinity of the said property. The property owners usually conducted these valuations themselves via their own research and observation.
On the other hand, these indication valuations can also be done with the usage of free online tools for valuation and also by using the past transaction report of a specific property. These historic transaction records can be used as a gauge to the property price.
Some of the portals include the Urban Redevelopment Authority (URA)’s e-service for private residential using transactions and also the Housing Development Broad (HDB)’s e-service of Resale Flat transaction records for public housings. Other online property portals such as 99.co also offer such feature when one search for properties to buy and rent on their website.
In contrast, the actual valuations will be much more in details and are done by qualified valuers and surveyors. These professionals, who are accredited to, ascertain a specific property’s value in the market using a number of measurable metrics.
Normally, the valuer will do their assessment base on:
– The general locality
– The zoning that is established by the URA
– The land area of the specific property
– The built-up size of the specific property
– The amount of rooms that are in the property
– The accessibility of the property via vehicle
– The property’s age
Other than those factors above that go into the assessment on the worth of a property, some other little details will also be taken into considerations.
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Factors such as if the owner is living in the property, the overall building’s structure like the number of storeys it has, the locality of the residence at the block (for HDB, the point blocks usually has high valuation), the interior furnishings as well as the state of theses interior furnishings
As one will be anticipated, the valuation of a residence will vary depending on the changes in the nearby amenities, for example a new retail mall, or an upcoming MRT line.
There are also grading are that will be given to the condition of maintenance and/or repair that the residence needed. These consist of the condition of repair for the building as well as the state of the interiors of the property. This means that if the fixtures in the property such as the floorings and the walls are not well maintained in an acceptable condition, it will impact negatively on the valuation report of the home.
The valuation report will provide with the details such as the condition, the land size, the structure as well as the resulting value of the residence. But do take note that not every bank will be having the same property valuation report. In order to have a more precise indication on the value of the property, it will be ideal to have at least 3 different valuation reports from different sources and take in the average or majority range.
In the matter of fact, home owners should never solely rely on the bank valuations as the guide for the worth of the property in the market. The banks can also provide valuation outcomes that will be differ vastly from one another. This will mean that a portion of the valuation procedure is involved greatly base on guesswork and not on clear assessment guidelines.
For those living in private property, in order to get a more accurate property value estimation, it is suggested that they could engage in the services of the valuers that are listed by the Singapore Institute of Surveyors and Valuers or they could also engage in the more well-known real estate companies such as DTZ, Savills, Colliers and Jones Lang Lasalle to have their property valuation done.
For the public housing flats, the unit’s valuation can be done from HDB directly itself. The assessment will be done the one of the valuers that is in the government agency’s approved panel. These valuers are professional licensed as well as qualified by the Inland Revenue Authority of Singapore (IRAS) which is the government’s main administrator for taxes in Singapore.
Do take note that for resale HDB flat, the request to the HDB for the valuation report can only be done by the buyer after an Option to Purchase has been granted. Sellers no longer able to request for valuation report from the HDB.
For other option, home owners can also obtain a completed property valuation report from the property valuation from SRX that is professionally prepared by licensed appraisers.
The Advantage of Having a Property Valuation in Singapore
A comprehensive property valuation report which combined the good information on the values of similar homes will assist home owners to position their property better when it comes to sale. Other than the obvious plus point of getting an understanding how much the property is valued from the perspective of a company, having a property valuation report will also be beneficial to the home owners in terms of letting their potential buyers to have peace of mind when they wanted to buy the property by allowing the buyers to know that a “fair value” is priced for the said property. This will also avoid any dispute on pricing with the potential buyer.
For the buyers, this will help them to commit to an overpriced property which will potentially involve in issues with loan after putting down their down payment. Banks will conduct a property valuation before offering a loan to the buyer. In the event, there is a disagreement from the bank with the price that the prospective buyer has committed to pay; the quantum of the loan might be reduced. The property valuation will act as a support document for the prospective buyer to get a mortgage loan.
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Issues that may arise from the Valuation Report
Property valuation is a permutation of art, science with also a bit of thinking intuitively. Nevertheless, while getting the value of a home is a practice usually, there will be also potential drawback from suffering the emotions from the spur-of-the-moment emotions. This is that property owners have the tendency to inflate the selling prices that is based on their sentiments that are strongly attached with their properties.
For example, certain of the property sellers may consider the price tag that is put on the properties of their neighbours and put the price of their own homes with a higher premium. To leave aside the ego and pride will always be the top option in terms of having the property negotiations. Always take note that while it is the seller that determines the price of the property, it will be always the purchasers who will think whether it is worth as such. As a result if the seller is pricing their property well beyond and above what the average home purchaser wishes to pay willingly, then there is a high possibility that the prospective buyers will have high impressions that the property is overly inflated.
Additionally, one of the most risky things a motivated seller or a prospective home purchaser can do is to have the prices of the property valued base on hearsay, particularly lack of having their homework done in the first place. Today’s property market is very transparent. With that, those searching for their ideal home will need to have their due diligence done by establishing the fair value of the market by first comparing on the similar properties then decide whether to go into the negotiation stages.
Common sense will tell that by applying objective and rationale thinking while seeking for a property is the priority of the current situation. Buying and selling on impulse takes place more that often which majority will think. If everything else is not succeeded, the rule of the thumb will be to sell and/or buy property that does not drift over from the average value over 3 percent for the specific property that is in the property market.
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