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Errors That Decrease House Valuation Accuracy

Getting an accurate property appraisal is crucial when buying or selling a home in Melbourne. However, there are some common mistakes that can lead to improperly valued houses. An overvalued or undervalued property valuation can cost homeowners thousands of dollars. Being aware of these errors can help ensure you receive a precise appraisal.

Incorrect Home Details

One of the most common errors that leads to inaccurate valuations is providing incorrect details about the home. The appraiser relies on information like square footage, number of bedrooms/bathrooms, age of the home, renovations done, etc. If any of these details are inaccurate, it can skew the appraisal significantly.

For example, an appraisal done on a 2,000 sq ft home that is actually 1,800 sq ft may overvalue the property by tens of thousands of dollars. Conversely, failing to disclose renovations and upgrades could lead to an undervalued appraisal. Providing photos and walking through the home with the appraiser can help minimise incorrect home details.

Ignoring Supply and Demand

Appraisals should factor in the current real estate market conditions like inventory and buyer demand. If supply is low and competition high, the value may be boosted above recent comparable sales. Ignoring market trends could mean an appraisal comes in lower than the true market value.

Similarly, in a buyer’s market with high inventory, using only peak sales as comparable valuations will lead to an overvaluation. Appraisers need to weigh recent sales more heavily in these conditions. Keeping the appraiser informed of current supply and demand will help achieve an accurate appraisal.

Relying on Automated Valuation Models

While automated valuation models (AVMs) have improved, they cannot fully replace a detailed appraisal by a qualified professional. AVMs rely heavily on public data like recent sales, square footage, and basic features. But they cannot account for condition, upgrades, or unique home characteristics.

Appraisers take a more holistic approach by doing an onsite inspection and using both public records and professional judgement. Relying solely on an AVM valuation often leads to an oversimplified and inaccurate appraisal.

Failing to Provide Enough Comparable Properties

Appraisers rely heavily on comparable sales data to determine valuation. Providing enough quality comparables helps them gain an accurate picture of the local market and your home’s value. Lack of sufficient comps may force appraisers to use sales farther away or sales of dissimilar properties.

Supplying recent sales data on at least three similar nearby homes can help the appraiser find the best comps. Photos, listings, and property details of potential comparables helps them determine which are most relevant. The more quality comps they have, the more accurate the appraisal.

Getting a precise home appraisal depends on limiting potential errors throughout the process. Avoiding common mistakes like inaccurate details, insufficient comps, or overreliance on AVMs can help achieve a valuation that reflects true market value. This ensures buyers and sellers have confidence they are getting a fair deal.