The Ultimate Guide To Renovation Course - Module 11: The Valuation Template

This is the document that you will prepare for the Valuer. Download a template that you can modify from the bonus section. After completing each section of the Valuer document, I would then take this to officeworks or a local print shop to have them printed with color pictures and binded into a professional looking folder. Now there's a fine line here, so tread carefully. You don't want to come across like you're telling the valuer how to do their job. It's more along the lines of I've put this together for describing all the features of the property and all of the things that I've done. There's other relevant information in there and if you have any questions during your inspection, please don't hesitate to ask me. This is just to help you out. Remember, they need to provide three comparable sales to the lender. So so you do the work and find those for them and they usually have to be settled sales. So if the house around the corner has just sold but not settled, include the details of the real estate agent, their phone number, the date of sale and the price. Most valuers spend a lot of time on the phone to agents validating information make this easy for them. They usually need the sales within three months of the valuation date though, so keep that in mind. Now, if your property is the exception to the norm for your area, that is there's no other five bedroom houses with a granny flat, tennis court and pool, then there's no other comparable properties. And in this case you might find the valuer can't provide the lender with the required comparable sales and that spells trouble for you and actually probably no lending. A word of warning. Many lenders will not allow a revaluation within a few months of purchase or the last valuation. This could mean that your 14 day renovation may actually take three or even six months before you can get access to that equity, especially if there's a mortgage insurer involved. Once again, your mortgage broker will know all this. Use them and their skills to do this research for you before you buy so you're with the right lender. That's why knowing your property investing strategy is so important. Your broker needs to be on this from the start so you're with the right lender up front. That's the lender that's going to allow you to achieve your renovation strategy and execute it fully in the time frame you need. One of the worst things that can happen is that you run into a roadblock just because you have the wrong lender. The valuation template here's how the valuation document was presented for our structural renovation case study for privacy reasons relating to the buyer of this property, I have changed the address of the property and the name of the suburb. All of the other information is exactly as it was when presented to the valuer. So the valuation document includes the address 1 Smith Street Renaultville 3333 the title details volume and folio the municipality Smith county the zoning, the land, the description We've got a Californian bungalow, the building area, the architect and the design. So we go into the roof it's tile, the foundations they're concrete outbuildings. So the front fence it's woven wire, the rear fence it's paling the renovation details Purchased by Current Owners November 2011 the property when acquired was badly derelict. Now note often it's worthwhile adding this as it explains why the property was bought so cheap. We now know a lot about this due to your negotiating below the market value, but we don't want the valuer just adding the cost of the valuation or the renovation on top of the purchase price. The renovation cost. Now notice here that I have included the cost of the renovation. Valuers nearly always ask for this, but be aware some lazy valuers will just take what you've paid for it, add the renovation cost and call that market value. This will result in a very conservative figure because it doesn't take into account that you've purchased under the market and through your expert knowledge of what the local demographic desires added substantial perceived value. Regardless, this is completely flawed method of valuing a property. Here's why the market doesn't know and doesn't care if you spent $4,000 or $400,000 on the renovation. The market pays what the perceived value of the property is and what the price in relation to other properties in the area is. While I don't deliberately embellish the renovation costs to counter this, I do make sure that all of my costs are included in this figure, including all of the preliminary costs, the holding costs and the resale costs. Improvements Fully renovated house completed March 2012 California bungalow on a generous corner block four double bedrooms and study and formal lounge light filled open living dining area with features like a gas stone fireplace, large stone bench, kitchen with stainless steel appliances and a butler's pantry four double bedrooms and study, informal lounge, glamorous main bathroom and ensuite seating split system heating cooling in the living area, high speed data cabling throughout NBN ready wraparound entertaining deck, generous backyard garden and dual off street parking. A sought after neighbourhood A walk to the local parks and primary school in urban convenience only 6ks from the CBD Totally private property now the location A highly desirable and sought after street in Renault with high percentage of owner occupiers 100 metres to Renault North Prime School 300 metres to North Renaulville Kindergarten 6 kilometres to the Melbourne city centre 300 metres to Renoville Reserve and Oval 1 kilometre to Renoville Railway Station 1.1km to the main road Bars, shops and cafes Accommodation and fixtures the key features of the kitchen blancco 90 centimeter freestanding oven and cooktop Stainless steel Omega dishwasher Stainless steel under mount sink Stainless steel Caesarstone bench tops Butler's pantry Floor to ceiling window Full visibility of the backyard the key features of the bathroom Modern acrylic freestanding wall hung designer vanity oversized mirror Floor to ceiling rectified tiles Contemporary chrome tapware Key features of the ensuite Large double shower wall hung designer vanity Oversized mirror Floor to ceiling rectified tiles ceiling Contemporary chrome tapware Key features of other rooms Polished floorboards throughout oversized 2.4 meter high sliding doors in the living area Study and formal living area has a glass panel double door so the Renovation Summary we then put together a renovation summary. Again this is where all the hard work we did at the due diligence stage pays off. So the Renovation Summary this property has been specific specifically renovated to cater for the needs and tastes of the larger buyer demographic in this area. Young families family friendly features include a second living area or kids room Separate living and sleeping zones Separate bathrooms a master bedroom ensuite full length kitchen window for full backyard supervision Free standing bath for easy access bathing infants Generous front and backyards with lawn and secure fencing Close proximity to schools and recreation facilities Then we add some remarks not subject to flooding or landslide not affected by rail not affected by pests not associated with the storage or emission of toxic materials no non conforming improvements not included on the heritage register Comparable Sales Then it's onto the list of comparable sales starting with the inferior properties and then onto the similar and superior properties. It's important to add superior properties. This shows your professional objectivity so comparable sales. They will have access to all this data for these sold or settled properties but not for the sold yet to settle properties. Thus provide this information and the real estate agent's name and phone number so they can verify these sales easily. If you want include the most up to date sales then you need to do this. I also then provide the valuer with an alternative valuation method for the benefit of Cross reference so this is my alternative valuation method based on rental appraisals. Rental appraisals from two local real estate agents have predicted a rent of between $800 to $850 a week. The current residential rental return or rental Yield for Renoville is 4 to 4.3% now March 2012 Renault the rental yield is 4% sourced by RP Data. The rental yield is 4.3% sourced by Residex. Please note, Rental yield is calculated by dividing the annual rental income by the purchase price of the property. The Valuation Calculation Selecting the most conservative data, we can estimate the property value as rental income. $800 a week multiplied by 52 weeks equals $41,600 in rental income. Annual rental income of $41,600 divided by the rental yield of 4% gives us a property value of $1,040,000. The owner of this property is a full time property investor who has carried out extensive due diligence on both the property values and and buyer demographic in this area. All of the comparable sale data provided was within close proximity to the subject property. The property has undergone a major structural renovation and as such should be treated as new or very close to as new dwelling. In conclusion, after gauging all of the above sales evidence, I anticipate the value of this property to be in the vicinity of 1.04 to $1.1 million. So that's the valuation document and from that point on it's up to the valuer. But we can be satisfied that we've put the best case forward for a favorable valuation.