DO YOU NEED A REAL ESTATE VALUER?
by Neil Jenman
READING TIME: 4.5 mins apx
If all real estate consumers – sellers, buyers, or investors – hired a valuer before selling, buying, or investing, much stress, heartache and loss would be avoided. Sellers would lower their risk of underselling. Buyers would have more confidence. And investors would almost eliminate the chance of disaster.
THE COST OF A VALUER.
An average valuation on an average home costs around a thousand dollars. With the average cost of homes now around a million dollars that’s 0.1 percent. Valuers are excellent value. Sure you can save a few hundred dollars by not hiring valuers. But you can cost yourself tens (even hundreds) of thousands of dollars if you don’t hire one.
VALUERS ARE TRUTHFUL.
The difference between valuers and many industry players is that valuers have no incentive to sprout false information. Their lives are resolute towards accuracy.
SKEWED INCENTIVES.
Take a quick look at most players in the real estate world. See how the incentives are skewed against truth.
WHEN YOU SELL a home, you will likely choose the agent who gives you the biggest quote on the value of your home. But agents are not valuers. They are salespeople. They only get paid if you list your home with them. The biggest liar often gets the job.
Consequently, most homes come on the market with owners expecting too much. Soon their hopes are dashed after they are put through the ‘conditioning’ process. Inevitably their homes are undersold.
WHEN YOU BUY a home, you can never be completely sure if you are paying the right price or not. Agents always say, “now is the best time to buy”. Sure, it is always the best time for an agent to earn a commission.
WHEN YOU INVEST, look out. Thousands of Australians buy dud investment properties. There is an entire subculture devoted to ripping off inexperienced investors. Rows of cookie cutter (identical) homes are built in less desirable areas on the outskirts of cities and towns; all aimed at naive investors.
WHEN TO HIRE A VALUER
When you’re selling a home, before you call an agent, you should call a valuer. The valuation is confidential. You pay for it, it’s yours. If the valuation is too low, you may decide not to sell which means you’ll save thousands of dollars in needless marketing costs trying to get an unrealistic price. Take the risk out of selling. Get a valuation from a qualified valuer not an agent.
When you’re buying a family home, if you have doubts about value, hire a valuer. If banks use valuers, so should home buyers. The only time you wouldn’t hire a valuer is if you love a home so much (and you can afford it), you don’t care about the price. You just want the home.
When you’re investing, be on guard. You are much safer buying an investment property through a suburban real estate agency than an investment company. When people die, their greatest asset is usually their family home. Not some pokey investment property hours away.
If property investors were compelled (by law) to hire a valuer before buying an investment property, hundreds of billions of dollars would be saved. All at the cost of a few hundred dollars per person.
A valuation could save you hundreds of thousands of dollars.
SUMMARY
Valuers are the hidden heroes of real estate. There is only one thing wrong. They are not salespeople. And that hurts them. Most valuers are not good at self-promotion. They are too humble, too reserved, and yes, too decent. They have not secured the high place they deserve. Unlike agents, valuers don’t splash their faces on billboards and bus stops. They don’t ask you for marketing money to promote themselves. They don’t talk you into selling for a low price to get a high commission. Sure, valuers are not perfect. Every dodgy agent has a tale to discredit a valuer. But if most agents get prices wrong, most valuers get prices right. They have studied for years to qualify as valuers.
Think carefully. The next time you want to do anything in real estate, the first question you should ask is: “Do I need a real estate valuer?” The answer is almost certainly yes.
Everyone wants a good deal in real estate. Valuers are a good deal.
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Acknowledgment: Thanks to Steven D Levitt, professor, author, and lecturer for your work on how incentives cause real estate agents to “act against the best interests of their customers”.
Further reading: FREAKANOMICS by Steven D Levitt and Stephen J Dubner.
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Ian Sutherland
October 29, 2024 @ 11:13 am
I greatly appreciated your informative article on the benefits of spending a $1000 to engage a real estate valuer.
Neil Jenman
October 30, 2024 @ 7:05 pm
Thank you for letting us know.
Rob Lagan
October 29, 2024 @ 1:28 pm
As always … excellent advice.
Neil Jenman
October 30, 2024 @ 12:57 pm
And as always we appreciate your support.
Take care, Neil
Stephen English
October 29, 2024 @ 2:11 pm
Hi Neil
Sorry, I am usually right behind you but not on this one.
Firstly you say a valuation will cost a thousand dollars and then later a few hundred.
I have been helping a first home buyer who has missed out on three properties at auction. I accept that the agents have probably lied to her about price but if she had got a valuation on all three she would be down $3000 rather than just disappointed! It’s like building inspections which apparently cost $800 in Adelaide. She now knows what to look for in a switchboard and other areas. The problem is some agents won’t let you do your own inspections such as looking into the roof area. I hope I am passing useful info to her so that she can do her own inspections. We bid at auction for the house my wife and I live in now 9 years ago but I said I need to climb into the roof – the owner said not necessary as new roof – I said I will not be bidding if I have not inspected the roof area (and under the floor!) so the owner and agent soon said ‘Yes’ and organised a special inspection time. We were essentially the only bidder.
Neil Jenman
October 30, 2024 @ 12:25 pm
Dear Stephen
Thank you for your comment. It’s clear that I may have to write more clearly. Or you have to read more slowly. I’ll accept the blame. When I wrote “an average of $1000 per valuation”, I was talking about family homebuyers and homes worth $1 million. Later when I wrote about investors, I wrote about hundreds of dollars because investment properties are generally much less than family homes – especially those properties purchased through spruikers. I hope that explains my point. I’m sorry for the confusion.
As for the cost, your example case is the rare exception. As I wrote, if people love a home, they may not need a valuation. I think I would rather see the occasional buyer spend thousands of dollars to make sure they are safe rather than to see almost every seller wasting thousands of dollars on needles advertising. Thank you again for contacting us. Take care.
Kind regards
Neil
Ben Balzer
October 29, 2024 @ 2:11 pm
Dear Neil,
Thank you, thank you, thank you!
Your advice saved my mother in law $60,000 in 2022. The agent was selling her investment unit for a lightweight $850K the family were concerned. When the agent declared that the purchaser was his nephew, I was livid!
Having read your book Real Estate Mistakes, I knew what to do. I called a valuer I happen to know and respect who came in at $930K an extra $80K. I contacted the head of the franchise organisation and we had a meeting with the local franchisee who took over the sale. Everything was very pleasant and gentlemanly. We acheived $910K, a $60,000 increase. As Covid lockdowns were rolling along we did not hold out for more. It was a fair price in the end- thanks to you!
I might add that I have heard a (non real estate) salesman saying that the elderly are very trusting, implying they are easy prey. This is what nearly happened here!
Thanks again,
Kind regards
Neil Jenman
October 30, 2024 @ 1:01 pm
Thank you for sharing such an uplifting story with me, Ben. Of all the shenanigans going on in real estate, the financial abuse of the elderly upsets me the most. What was about to happen in your family is not a rarity, it’s common. Some agents seem to think it makes them clever to take advantage of, elderly people. I think it makes them despicable.
Take care
Neil
PS Please call us before you call any agents. You had a narrow escape. We check so many things. Not much gets past us.
Carrie Carr
October 29, 2024 @ 2:32 pm
I didn’t know values existed. I I wanted to sell in, say 12 months time when should I get a valuer in. B4 I ready house? Or after it’s spic & span. I’m not sure I can get it that good (by the way).
How do you contact a valuer?
I love all your writing & eagerly read your emails.
Neil Jenman
October 30, 2024 @ 6:40 pm
It’s probably best to get a valuer when you’re closer to being ready to sell. If you get one too soon, it could be out of date if the market changes by the time you want to sell. And that will mean paying twice.
Kind regards
Neil
Margot McLaughlin
October 29, 2024 @ 3:00 pm
As always, Neil, your articles are “on the money” – thank you!
Just one question: how can one select a good valuer? One who is qualified, accurate and ethical.
Love your work!
Margot
Neil Jenman
October 30, 2024 @ 12:33 pm
Dear Margot
Thank you for your question. As with agents, we keep records of valuers who seem ethical and competent. If people contact us and give us their area, we can let them know if we have an agent or a valuer that we feel will look after them. I am pleased that you are settled into your new abode. You look so happy. Thank you for using our services.
Take care,
Neil
Danny Gurney
October 29, 2024 @ 4:07 pm
Hi Neil.
Such a great article.
As a realestate agent, I totally agree.
Probably the best words of advice for anyone selling.
With all the information available now days, valuers are more accurate than ever, and agents inflate the price more than ever.
Regards. Danny
Neil Jenman
October 30, 2024 @ 6:42 pm
Thank you, Danny. It means even more to get a nice compliment from an agent. If there were many more agents like you, I wouldn’t get so stressed about all the good people who lose so much money in real estate. Most without even realising it happens.
All the best
Neil