The world of real estate can be a mysterious one for those who are not in the know, but, hopefully, it is a world that everybody will enter at some point. After all, owning a home that you have paid for yourself is the most significant financial investment that most people will ever make. Today STAR CENTS starts a new series, 'Land Matters', which will cover the ins and outs of real estate.

Every Sunday, the real estate classifieds are a must read for many and a preferred read for others who are not looking to rent, buy or sell a house at that particular moment. They make fascinating reading, but for those looking to buy a house, or land, only they can also be very daunting, as the prices seem to leap even over the course of a few weeks.

However, what the seller may be asking is often significantly different for what the property is worth and that figure is determined by a real estate valuator. And, it must be remembered that a mortgage will not be given for a purchase price higher than the official value.

Market value

A valuation is required for not only the sale or purchase of property but also for insurance, for balance sheet purposes (applicable to companies) for redevelopment, as a going concern (again for business purposes) and for probate of a will.

The valuation determines the market value of a property, which is the what the market will pay for it in a transaction at arm's length when there is a willing buyer and a willing seller.

In other words, there is no friendship involved or other factors which may influence the price, other than a straight business transaction.

To be valid, a valuation must be done by a licensed real estate valuator. However, not all mortgage institutions use the same valuators and before proceeding with a valuation persons should check which are the preferred valuators of the mortage company they wish to use.

Next week: The factors that affect a property's value.

Information supplied by Norma Breakenridge of Breakenridge and Associates.