Getting property valuations in this pandemic situation has been difficult. If you are also looking for evaluating your property by an expert, you must know how difficult it is for both the parties to go through the procedures. So, what is an alternative to such a system?
Well, this is what we will inform you in the following sections here. We’ve designed each section for you to understand the basics of property valuation. Moreover, we’ll also guide you on how you can get the actual evaluation of your property without physical verification by examiner. Now, this will not only reduce your risk of getting contaminated but also ensures the safety of the visiting personnel and getting the accurate number for your property.
The scenario of property valuations amid uncertainty
Before we begin with the verified procedures, we’d like to share a brief on KPMG’s financial comments on the current scenario and the economic uncertainty during the pandemic. The Global head of asset management cited that making fair and accurate assessments of assets is quite challenging in this dynamic and fast-changing world.
Although it has become a struggle for the experts to visit and evaluate properties of the realtors, the staff in the real estate sector is trying to collaborate with the clients. Furthermore, KPMG global is also in talks with the European Public Real estate Association to closely monitor for best and safe trade practices for property valuations.
Moreover, you have to understand that full property inspection and thorough appraisals are not possible during current situations. Hence, you may find that the find survey report may contain comments like:
- Virtual inspection carried out
- Property inspection incomplete, or
- Only external review available.
Now, this does not mean you will not get the appropriate monetary value of the property you own. So, there is no need to worry. During this pandemic situation, it is a safety measure for the trade bodies to give an approximate valuation with the above-mentioned comments so that it can reflect the market condition. Once the circumstances improve, you will find that reassessment will be carried out with complete tools for the accurate financial value of your asset.
This comes under the activities by government-sponsored enterprises like Fannie Mae and Freddie Mac. They were the first to suspend physical visits for appraisals. Instead, they issued guidelines to their reviewers to exterior-only or virtual evaluation for loans or collateral.
How can I be assured of the financial evaluation?
Property valuations are tough to judge, especially when the advisor is only assessing your property through a desktop or from the outside. However, you can ask the appraiser on the methods they have used to evaluate. This will give you an idea of the methodology they have followed and how they reached their evaluation conclusion.
You must be thinking that I have no idea of finances or methods, whatsoever. So, how can I judge the results? You are right to think so and therefore, we’ve brought to you the following valuation methods which are widely used and accepted by firms for property valuations.
- Kerbside evaluation technique: this technique is used in simultaneity with desktop evaluation. In this process, the valuer inspects the exterior of the building or property and note down their observation. Now, you should know that this was earlier used for low-risk loans and was accepted if the loan-to-value ratio was less than 80%. But soon after the Covid-19 outbreak, the banks have revised their policies and now, up to 95%, LVR can be considered.
- AVM calculations and desktop valuations: as already mentioned, the valuer needs to draw evidence and property valuations from Kerbside evaluation technique as well as desktop evaluations. In this method, the valuer need not visit your property but can look at the exterior and interior using a computer or mobile phone. You need to show them your property via video-calling or sending high-quality pictures. But the major disadvantage of sticking only with this method is that it will always be referred for final evaluation. Since this is a non-invasive method, the LVR is restricted to up to 90% only.
Hence, these are the ways through which property valuations are done in the time of COVID 19 and once you understand the value nomination, you will be assured on how properly assessment was done. In case of doubt, you will always have a choice of consulting more than one expert and check how closely their evaluations match.