When purchasing a home, the bank conducts a valuation to ensure the offered price aligns with market standards, preventing overpayment or underselling. Angela Glover, Head of Product at FNB Home and Structured Lending, explains that valuations may occur physically, through a professional’s assessment, or virtually, utilizing industry data and models. However, this evaluation solely focuses on determining the property’s market value and doesn’t address structural flaws or defects.
To assure the property’s quality, it’s advisable to enlist a professional inspector, engineer, or architect for an inspection. This examination, organized independently, scrutinizes the property for defects, structural integrity, and overall quality. Opting for an inspection provides peace of mind and confidence in your purchase.
“You will also notice on your mortgage loan agreement that there are different valuation amounts, depending on the purpose,” adds Glover.
Purchase price: This is the value that you are paying for the property.
Replacement value: In the event that the property is completely demolished due to an insurable event, the full and current cost of replacing the building, together with additional costs, have been accounted for – this value is used for insurance purposes.
These values relate specifically to the property and structure, not to be confused with home contents, which relates to what is inside the house. Insurance for home contents is separate from Home Owner’s Cover (Building cover).
“The bank also offers valuations on request, which consumers can arrange via the FNB App. You might want to arrange such a valuation after doing renovations or before selling, to get to a market-related value. These valuations attract a fee, details of which are available on the FNB website. You can also get a free value estimate on our App via nav»Home,” concludes Glover.
