Investigations into the property valuation system recently revealed that the values of some properties were increased. The result? Increased tariffs and taxes for homeowners.
So, what are the financial impacts of a flawed property valuation? One of the biggest setbacks for a homeowner would be in the event of an insurance claim.
Homeowners need to ensure that their property is valued at the replacement value and not at the market value.
Replacement Value is different from the market value of your home. If you were to lose your home in a fire, a claim based on Replacement Value would cover the actual cost of the materials and labour needed to rebuild your home. The special features will not be covered, just the structures themselves.
In Laymen’s Terms:
- Market Value: The price a home can be sold for.
- Replacement Value: The amount determined to restore a house back to its original state, should destruction occur (e.g. Burnt down).
A homeowner runs the risk of being underinsured or liable for costs to repair property or replace damaged goods in the home, if they rely on the valuation amount as specified by their municipality
Insurance policies need to be updated and a new property valuation needs to be conducted at any time renovations take place at the property. It is extremely important that this process is conducted correctly to ensure that all assets and structures are protected.
Most insurance companies offer property valuation services. When policies are up for renewal, it is a good time to ensure that all valuable items and assets are still insured for a relevant amount.
Three factors insurers will take into consideration when conducting your property valuation to renew your insurance policy, which will most probably result in higher premiums:
- Location: Is your home situated in a flood/fire ‘prone’ area?
- Swimming Pool: The possibility of leaks and cracks will affect your monthly premium
- Poor Maintenance: Are you replacing old pipes and roof tiles, when they need to be replaced?
It’s extremely important that all homeowners conduct proper property valuations at least once a year to ensure that the insured value of the property is still relevant.
At FPC Property Consultants we offer a trustworthy property valuation solution, which could potentially save you a lot of money down the line.
FPC Property Consultants reputation is built on:
- Integrity: you can rely on our advice;
- Communication: we market properties effectively;
- Customer care: we value our clients and express this in our relationships;
- Results: we achieve superior results in every situation.
FPC Property Consultants are passionate about property and we aim to be progressive in our thinking and understand good working relationships need care and consideration.