Estate agents often advertise a free value estimate. That sounds like a great alternative to an expensive valuation report! And when banks also talk about a value estimate when they actually mean a valuation report, it gets confusing! So what is the difference between a value estimate and a ‘real’ formal valuation?
Contents
- Value estimate
- Formal valuation
- When do you choose a value estimate and when a formal valuation?
- Conclusion
Value estimate
A value estimate (waardebepaling) is an estimate of the value of your home. An estate agent comes round, looks at all the features of your home and then gives an indication of the expected sale proceeds. When estate agents advertise a free value estimate, they usually mean a sales advice meeting. A meeting where an estate agent comes round to estimate the expected sale proceeds and explain the added value of the agent and their office.
You also see more and more online value estimates popping up. Unfortunately, this value check isn't accurate with every estate agent. Only NVM agents who have access to Brainbay and have the extensive package linked to a value check have a reasonably up-to-date value in their value check. This value check is entirely data-driven. It's based on average figures and on the known features of a home.
Formal valuation
A formal valuation (taxatie) is an objective assessment of the value. Nowadays a formal valuation has to be written up in an NWWI report. This report contains the following elements:
- Floor area
- Maintenance and structural condition
- Marketability
- Developments in the neighbourhood
- Market trends
- Flexibility and possibilities
- Sustainability
- Location of the home
All these factors together determine the value of the home. The valuation report is a report on your house. The value is substantiated using reference properties: comparable homes in the area. These properties have been sold previously and give a good picture of the home's value. The neighbour's house, for example.
When do you choose a value estimate and when a formal valuation?
You choose a value estimate if you want to get your bearings on the housing market, or want to start exploring a restructuring of your financing. You then have an indication of the value and can make a well-informed decision about buying another house or considering different financing.
You choose a formal valuation if you're actually going to apply for financing or change something in your financing. For example, you want to lower your interest rate surcharge, for which you have to show that the value is high enough relative to your mortgage amount. Or you want to apply for bridging finance, or refinance your mortgage.
Conclusion
So an NVM valuer determines the objective value of a home and writes it up in a report. A value estimate is only an indication of the expected sale proceeds. It's often accompanied by a discussion of the sales strategy and the points to watch out for when selling a home. So a value estimate is for yourself. It isn't enough for, say, a bank when revising your interest rate, arranging bridging finance or refinancing. Then the bank needs a validated NWWI valuation report.
