How accurate should a qualified property valuers valuation be

The accuracy of a qualified property valuer’s valuation can vary depending on several factors including the methodology used, the quality of data available, and the complexity of the property being valued.

However, in general, a qualified property valuer strives to provide a valuation that is as precise and reliable as possible within the constraints of the available information and the scope of the valuation assignment.

Typically, a valuer aims to provide a valuation that falls within a certain range of the property’s true current market value. This range can vary but is often expressed as a percentage, such as +/- 5% or +/- 10%, indicating the acceptable margin of error.

It’s important to note that while valuations are based on thorough analysis and professional judgement, they are not guaranteed to be exact.

There can be unforeseen factors that influence property values, and valuations are always subject to some level of uncertainty.

Property valuations can vary due to a range of factors. Here are ten reasons why a property valuation may be inaccurate:

1. Market Fluctuations: Valuations are often based on current market conditions, but if there’s been a sudden shift in the market, the valuation might not accurately reflect the current value.
2. Errors in Data: Valuations rely on accurate data regarding the property’s features, such as size, condition, and location. Mistakes in this data can lead to an inaccurate valuation.
3. Incomplete Information: If the valuer doesn’t have access to all relevant information about the property, such as recent renovations or changes in the neighbourhood, the valuation may be incomplete.
4. Subjectivity: Valuations can be subjective, influenced by the valuer’s interpretation of the property’s characteristics and market conditions.
5. Comparable Sales: Valuations often rely on comparable sales data, but if there are limited comparable properties, or if the selected comparables are not truly similar to the subject property, the valuation may be skewed.
6. Economic Factors: Economic conditions can impact property values. For example, a downturn in the economy or changes in interest rates can affect the demand for property and, consequently, its value.
7. Zoning and Regulations: Changes in zoning laws or regulations can affect the value of a property. If these changes aren’t considered in the valuation, it may be inaccurate.

8. Environmental Factors: Environmental issues such as contamination or proximity to hazards can impact property values. If these factors are overlooked in the valuation process, it could lead to inaccuracies.
9. Timing: The timing of the valuation can also affect its accuracy. Market conditions can change rapidly, so a valuation conducted at one point in time may not accurately reflect the property’s value at a different time.
10. Special Features: Unique features of a property, such as historical significance or architectural design, can be challenging to value accurately. If these features aren’t property accounted for, it can lead to an inaccurate valuation i.e. Heritage Overlay, or environmental issues.

However, a well-executed valuation by a qualified valuer should be considered reliable and provide a solid basis for decision making in real estate transactions, financing, taxation, and other purposes.

To discuss any property related matter, please contact Mark Ruttner, Managing Director
mr@fvg.com.au 0411 419 674

First Valuation Group
Suite 110/181, St Kilda Road, St Kilda, Victoria, 3182
valuations@fvg.com.au