When buying a property from the secondary market, most buyers and sellers alike find that a bank valuation on the property create fresh problems for the transaction in cases where the valuated amount is below the purchase price. Sometimes the difference could be as high as 20 per cent or more and this creates problem with the buyer who may not willing or not able to fork out the difference in price since the bank will only provide financing based on the valuated figure.
However, there are buyers who do not mind coming up with this additional cash to secure the purchase of the property especially if they are experienced investors or home buyers. Of course if you have the will but not the cash, this will not work either obviously!
The appraisal of a property is usually carried out by a real estate appraisal or registered property valuation surveryor like Jones Lang Wootton. The value determined by real estate appraisal is the fair market value. The appraisal process is done using various methods. More often than not, the bank appraisals usually are conservative but they also need to protect their own interests. As in the case where a property is foreclosed or auctioned off, the reserved price is usually below market price.
The buyer of the property will have to pay for the valuation costs which normally runs into hundreds of ringgit depending on the value of the real estate.
The valuer will be appointed by the bank from which the buyer has secured a loan to finance the purchase of the property.
An experienced real estate investor will usually ignore the value from a real estate appraisal process. The investor has his ways of evaluating a property based on factors like ongoing developments around the area and potential capital appreciation in 2 or 5 years time for instance. He or she will take into consideration on how to add value to the property by taking on a property that just require minor repairs and or fresh paint for instance. A property with a bad smell problem may put off home buyers but a property investor views such properties differently – they see an investment potential for such properties.
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