By Tim McKibbin, REINSW CEO
The value of a property is subjective and potential purchasers will, for many reasons, place a different value on the same property.
The historical test is to consider what a willing but not anxious purchaser would pay a willing but not anxious vendor. So why do we get different valuations?
Firstly, valuation is an art, not a science. Secondly, the instructions given to the valuer will influence their determination of value. For example, a bank valuation is usually more conservative than a market valuation.
In disputes over a property, a valuer may be asked for a net valuation after the costs of sale are taken into consideration. With automated valuations, value is determined from algorithms designed over time. As each algorithm is different, each valuation differs.
So what is the real value of property? It is what someone is prepared to pay for it. As the old saying goes: "there is nothing like a good auction to ruin a valuation".