A valuation is a substantiated estimate of the expected sales value and is often part of sales advice. A valuation is a formal, independent value report that, for example, a lender may require for a mortgage. If you want to know what price you can probably sell your house for, a valuation is usually appropriate. If you need a validated report for financing or another formal reason, you usually need a valuation.
The difference in one minute
| Element | Valuation | Valuation |
|---|---|---|
| Main purpose | Estimate sales value and strategy | Determine formal market value |
| Executor | Sales agent | Independent, licensed appraiser |
| Result | Advice/indication, not a formal valuation report | Substantiated valuation report |
| Usage | Orientation and home sales | Often mortgage, financing or formal file |
| Costs | Sometimes without obligation/free, depending on the broker | Paid professional assignment |
When do you opt for a valuation?
A valuation is appropriate when you are considering selling, want to estimate your sales proceeds or want advice about asking price and presentation. The agent views the property, analyzes comparable transactions and discusses current local demand.
A good valuation is more than a number. You want to understand which features add value, which points buyers will critically assess and how asking price and launch strategy can be used.
When do you need an appraisal?
An appraisal is often necessary when applying for or changing a mortgage. A formal report may also be desired or required in the event of division, inheritance, divorce or tax/legal situations. The precise requirements differ per purpose and lender. Therefore, check in advance which type of report and which validation are accepted.
The sales agent of the home cannot simply use his own sales advice as an independent financing report. Independence and formal guidelines are important features of valuation.
How does a real estate agent determine the home value?
The estimate combines, among other things:
- housing type and living area;
- location, street and floor;
- maintenance, finishing and layout;
- outdoor space, light and views;
- energy label and installations;
- own land or leasehold;
- HOA finances and planned maintenance;
- recent comparable sales;
- current offering and competition;
- sales moment and target group.
In Amsterdam, the micro-location can weigh heavily. A comparable area in the same district does not automatically mean the same value. Noise, floor, elevator, foundation, balcony, leasehold and condition can make the difference.
WOZ value versus current market value
The WOZ value is determined annually by the municipality and has an earlier value reference date. The value is used for taxes and duties. As a result, the reference date is behind today and the WOZ is not a current sales promise.
The current market value looks at today's home and market. The WOZ can be interesting as a data point, but does not replace a recent analysis of comparable transactions and home characteristics.
Online home value versus home visits
An online calculation tool uses available model data and can be useful as an initial orientation. However, the model does not always see the actual condition, quality of renovation, light, view, noise, special layout or current homeowners' association issues.
A visit allows for more accurate sales advice. The real estate agent can also explain why two apparently comparable homes are valued differently. Therefore, use an online indication as a starting point, not as a guaranteed return.
Three practical situations
1. You expect to sell within a year
Choose a valuation and sales advice. Also discuss which small improvements are useful and which investments are unlikely to fully return. You usually don't need a formal appraisal at this stage.
2. You buy a house with a mortgage
The lender usually requests a formal appraisal of the purchased home. A purchasing agent can estimate the market value in advance for the offer, but that is not the same as the final valuation report.
3. You want to withdraw equity or adjust your mortgage
Ask the bank or advisor which valuation report is accepted. A non-binding valuation is usually insufficient for a formal financing decision.
Is a valuation free?
Many sales agents offer a no-obligation valuation, but that is not a legal rule. Ask in advance whether costs or conditions apply. Moreover, free does not mean that the advice is worthless: for the broker it is often an introduction to a possible sales assignment. Keep the commercial goal in mind and ask for clear substantiation.
Can the outcome change?
Yes. Market value is time-bound. New comparable sales, interest, supply, maintenance or new information about homeowners' associations and leasehold can influence the estimate. Sales strategy also plays a role: an asking price is not necessarily equal to the estimated market value.
Therefore, have an old valuation updated when your sales plan changes or the market has moved into a new quarter.
Frequently asked questions
Do I need an appraisal to sell my house?
Usually not. A valuation/sales advice is usually appropriate to determine the sales value and asking price. The buyer may need an appraisal for his mortgage.
Is the WOZ value the same as the market value?
No. The WOZ has a fiscal function and an earlier valuation date. The current market value looks at the home and market at the time of valuation.
Can an online tool accurately value my home?
No. A model can provide a bandwidth, but may lack condition, appearance, finish, sound and current legal or homeowners' association information.
Who can conduct a formal appraisal?
A competent, independent appraiser who meets the requirements of the client and lender. Ask in advance what registration and validation are required.
