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Decoding the Jargon - Valuation Reports

Updated: Apr 10, 2019

Are you looking to finance the purchase a new home or investment property or you just want to refinance your existing home loan to get a better interest rate? If so, your lender will require a Valuation Report before they approve your loan.

So what exactly is it and Why do lenders want them??

A Valuation Report is completed by a licensed surveyor. They will inspect the property and assess it's value based on comparable sales in the same area. They will also include details of the land/property dimensions, photos and details of recent comparable sales in the area.

Another important element in the report is the Risk Rating. The surveyor will rate the Location/Neighbourhood, Land, Environmental Issues, Improvements, Recent Market Direction & Volatility on a scale of 1 to 5 (1 being low risk, 5 being high risk). The higher the risk the less inclined a lender will be to approve a loan with higher a LVR (see Decoding LVR)

My real estate agent has given me a valuation though! We hear this a lot.

Your real estate agent can give you what is called a Market Appraisal, which is an estimate of what they think they would be able to sell the property for. We would expect the values to come in at a similar amount, but a Market Appraisal lacks the detailed assessment that a Full Valuation Report contains and that the lender requires.

Contact a Gadsden Finance Broker for an Obligation Free chat if you have any questions regarding this or other finance concerns. PH: 03 5443 9098

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