How does bank or valuer value renovation?

The banks just order an independent valuer to go out and value the property as if it were post renovation – so it doesn’t come to them assessing each of the individual items you’re paying for in the renovation etc – but the overall picture. The best thing to do is to compare it against recent sales in the market of renovated properties and then compare against renovation costs to see what you can do for the best bang for buck. Generally painting, kitchens and bathrooms provide the largest uplift in values, but the latter two generally are the highest cost improvements too.

I always think of the valuer as a potential buyer so both the reno and the staging are done as if for sale, so pretty much same rules as sale apply (kitchen, bathrooms, overall street appeal, features buyers like in this area etc)

Then the valuer comes and I walk with him/her, explain what was done, mention the high quality finishes etc.

Usually the valuations come back pretty much as expected (as per my own market research and target price, all done before reno began).

Another thing I usually do is ask a property manager to provide their rental appraisal in writing (I let them know what it’s for and also offer to pay for their time if not planning to have them as PM or if they are not already the PM for this property, all in order to not abuse their service). Then, I submit that report with the order of the valuation, so the valuer knows upfront the rental appraisal, which helps set the property’s price in their mind, even before they leave the office 😉