Home appraisal versus home valuation: what do they mean?

If you’re getting ready to sell your home you may have heard the terms home valuation or home appraisal mentioned before.

A home valuation or home appraisal will give you an idea of how much your property is worth. However, there are differences between the two terms. Here is how each service works.

Home appraisals

A home appraisal is an estimated valuation of your home, completed by a real estate agent. During this assessment, the realtor will consider factors such as your home’s suburb or location, how much land you own, the size and position of your house, and the quality of your home’s build to make an informed assessment of how much you should sell it for. There are things you can do to boost the value of your home before you sell.

Appraisals are also influenced by current market conditions and would usually include information on properties of a similar size in similar locations to ensure the price you’re settling on is realistic and achievable for buyers.

How is an appraisal carried out?

The most accurate appraisals are carried out by real estate agents in person. Before you list your home for sale, the real estate agent will inspect your property and undertake research and analysis on similar home sales in the area. They can then present you with their final appraisal with an explanation of how they reached the figure. If you're selling your home, gathering a trusted support team is a great way to sell your home faster and for the best price.

Real estate agents can also do online appraisals. However, their findings will still be subject to an in-person inspection. With an online appraisal, the agent uses online databases to prepare the initial estimation by comparing property sales in similar suburbs. An online appraisal is also a useful tool for giving you a ballpark figure of your home’s value, especially if you’re not ready to put your home on the market.

An appraisal should be used as a rough guide and not a definitive valuation.

How much do home appraisals cost?

Home appraisals are free. Most real estate agents prepare home appraisals for their clients as part of their services. For the best results, use a real estate agent that is local as they have the best knowledge of the market in your area.

Home valuations

Put simply, a home valuation is more definitive than an appraisal. Formal home valuations can only be done by a qualified valuer who has undertaken the appropriate training. This means unless your real estate agent is qualified as a valuer, they can’t give you an official valuation.

Valuations are much more thorough than an appraisal and will look at factors such as environmental risks to your property, zoning and property damage. A valuation will take into account:

• size and position of your home

• number of beds and baths

• land your property is on

• quality of the build

• council zoning

• features of your home

• property condition

• property damage

• environmental risks to the property

• market influence

• sales of similar homes

How much do valuations cost?

Valuations do cost money, so it’s important to factor this into your selling budget. On average, a property valuation in New Zealand will cost around $1,000. Valuations are often slightly cheaper in smaller centres and slightly more expensive in Auckland or Wellington.

Do I need both an appraisal and a valuation?

In New Zealand, it’s a requirement that homes listed for sale undergo an appraisal. This will likely be included in your contract with your real estate agent. It’s up to you whether or not you pay for a valuation. A valuation could result in a higher or lower price than your appraisal — as it’s much more thorough. It’s important to be prepared for an unexpected outcome.

How to request a home appraisal or valuation

Any real estate agent will conduct a home appraisal on request. If you are thinking of selling your home this is one of the first steps you can take. On the other hand, it’s better to request a valuation when you are ready to put your home on the market. Since you are paying for the valuation, ensure you’ve finished any home renovations or DIY projects and that your home is ready to list, otherwise, you could miss out on adding value to your home.

Keep in mind that when you search for a property valuation online, you’ll find many free offers for a home appraisal. A property valuation must be done in person by a qualified professional.

Sites like qv.co.nz have nationwide teams of independently qualified valuers that can give you a fast, accurate valuation of your home.

Selling your home? Wise Move can help

Selling your home can be a stressful process. From organising the selling of your home to planning your big move, there's a lot to think about. At Wise Move we can take the stress off your shoulders and help you save money in the process.