Property investors – Knowledge is Power

It is a well known fact that one does not know everything about everything. Yet when investing substantial amounts of hard earned money - be it in stocks, shares or property, knowing everything is the imperative yet seemingly impossible task one needs to master. Unfortunately, the innate need for information often results in property investors gathering generous amounts of irrelevant data and consequently omitting pivotal determinants of value.

With property values being dependent on such a wide mixture of factors - ranging from building materials to the health of the economy, it is understandable that more detailed aspects of property valuation such as heritage listings, zoning, flooding and drainage trends are overlooked. However, in terms of property investment, a ‘mis-diagnosis’ carries dire financial consequences.

A property that depreciates in value or requires significant outlays of money to fix, is as appealing to an investor as a fork in the eye, yet many investors inadvertently fall victim to these ‘lemon’ buys because of alluring promises of financial growth and leisurely retirement.

Other investors have a vision for a property. They enthusiastically plunge superfluous amounts of money into realising that vision, only to find that upon completion the property has not increased in value to cover the costs of the work.

Numerous investors pay in excess of the market value for a property, believing that they are getting a good deal, and having full faith in its appreciation of value over time. The disparity in value and price inturn cuts into precious yield and hinders further investment through narrowed equity.

Commonly encountered mistakes when buying property:

  • Lemon buys - purchasing property that has structural, environmental and zoning issues
  • Over capitalising - investing more capital in construction and renovation than the value of the property upon completion
  • Swindled buyer - agreeing to a price that is above market value parameters

According to John Roper of Australia Pacific Valuations, these are all mistakes that can be prevented by seeking professional advice.

A professional valuation report determines an accurate and independent quantitative value of a property. This value is ascertained through analysis of the building construction, layout and location, with sspecial consideration being given to sales that have taken place within close proximity to the property of interest. “We are in the market every day of the week, so arriving at a value of a property is second nature to us” says John, who himself has been involved in property for the past 20 years.

Investors are sometimes put off by the perceived cost of a professional valuation and may consider it an unnecessary expense. However, figures show that a valuation prior to purchase eliminates risk of unknowingly paying above market value, as cautionary notes highlight the risks associated with the property and save investors thousands of dollars. Contrary to popular belief, the benefits of professional valuations outweigh the cost. “The majority of the high end residential properties attract a fee of under 0.1% of the value of a property” says John, Considering the security that the report provides, it is a trivial price to pay for a peace of mind.

But what can a valuer possibly tell you about the property that you have been researching that you do not already know? Plenty! An experienced valuer will scan, filter and synthesise the information that is pertinent to the value of the property. “Each report is done on a bespoke basis, with full customisation of headings and topics to represent the most important aspects of the property in question”.

For more information regarding property valuation benefits and uses please contact John on (02) 9223 9377 or visit the Australia Pacific website at www.australiapacific.com.au.

Press Release
Property values are influenced by a plethora of diverse and often ambiguous factors, which are often difficult to interpret. Yet in the property market, knowledge is power