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What exactly is a professional and well presented valuation report? Let us try and find the answers for the same. First and foremost, a good valuation report however well it might be presented will not make any sense unless it has a mention about the fair market value of the property that is being either bought or sold. This is the main purpose of any good valuation report and this figure should certainly be there. Apart from this, there are a number of other information which should also be available in a real estate appraisal or valuation report.
A professionally presented valuation report should help the buyer to take a decision based on the information and facts presented to him. For example, if one looks at quality valuation reports, you will certainly find a lot of subjective information. It will talk about the quality of life in the locality where the property is located. It will also share inputs about the quality of people who make up the neighborhood. It will also share information about the availability of various amenities and facilities in the locality.
All such information will no doubt help the buyer to firmly make up his mind whether it makes sense to go in for such a purchase or not. Further, good valuation reports are those that are submitted on time. Timely submission of reports is of paramount importance especially when there is a need to raise loans from banks and financial institutions. The legal aspects of the property must also be touched upon by a professional valuation report.
Given the above fact there is no doubt that the role of a real estate agent is extremely important when the entire process of real estate buying and selling is taken into account. In fact according to many real estate businessmen and others, it could even be considered as the most significant piece of information for any real estate transaction. It is therefore for us as customers to find out ways and means by which we can ensure that we have the best of services being offered by real estate valuers and appraisers.
To begin with it is important for us to know what the various types of information are available in a property valuation report. As mentioned in the beginning, the main objective of any property valuation report is to get a reasonably accurate picture of the fair market value of the property that is being bought. While this is the major piece of information, this alone is not the only reason why a valuation report is sought. There are other information too that is available from such reports.
A good valuation report has two major components to it, subjective and objective. The objective part mentions about the value of the property, the size of the property, the legal status of the property and so on. The subjective portion is the one that could add a lot of value to the buyer. It helps the buyers to make an informed decision whether to buy a property or not. This part of the information talks about the quality of infrastructure available around the property, the amenities and facilities that are available and so on. It also tries and compares the value of similar properties in the same area and draws a comparison with the property that is being planned for purchase.
Hence, given the above facts, there is hardly any doubt that valuation of a property is very vital and it should be accorded the importance that it deserves. As a buyer you should always make it a point to touch based with valuers who have experience and expertise in this field.
First and foremost, the main purpose of any property valuation report is to ensure that the buyer is able to fairly assess the value of the property that he is planning to buy. Though the market could be a reasonably accurate indicator of the value of a property, as a buyer there is nothing wrong to seek second opinion and get the value confirmed from a professional valuer. The next important reason why valuation reports are important is because it checks the legal status of a property and comes out with a report mentioning the actual owner of the property and other such information. Additionally it is also quite possible that the local government and revenue authorities depend on the valuation report for getting a fix on the stamp duty payable and also for calculating the capital gain taxes and other property taxes based on such valuation reports.
While these are the main purposes for which any valuation report is sought, there are a lot of subjective information too that is available from a valuation report. For example, a good valuation report will also talk about the locality where the property is situated and will also give some details about the infrastructure that is available. It will also make a mention about the quality of people who make up the neighborhood apart from sharing information about the kind of amenities and facilities that are available in the area. Hence, this information in conjunction with the objective and quantitative information will help the buyer to firm up his mind whether or not to buy the property. Therefore, when buying a property one should expect the above information to be available apart from something additional which the valuer might deem fit and useful for the customers.
To begin with a good valuation report without any doubt should contain the fair market value of the property that is either being bought, sold or being transferred from one entity to another. While this is the main purpose of any valuation report, this is not the only reason why valuation reports are written by property valuers.
The quality of information and the subjective nature of information that is contained in the valuation report is something that is another important point that one should never lose sight of. In fact for many prospective buyers and purchasers this information is of more significance and importance than the valuation figures that are available in the report. A good valuation report submitted by a professional property appraiser will amongst other things contain an in depth look into the area in which the property is located. It will talk about the infrastructure condition in the locality where the property is situated. It will also scan the area and give a feedback on the type of people who are living there. This is very important for buyers who are used to living with certain groups and classes of people.
A professionally made out valuation report will also talk about the value of similar properties in the neighborhood. It will also go deep into the current legal status of the property ranging from the current ownership details. If needed valuers will also go back in time and find out as to how many times the property has changed hands. They will also find out whether each and every transfer from one entity to another is good or not.
Hence, taking the above factors into account there is no doubt that hiring a good valuer is of utmost importance especially from the buyers point of view. At the end of the day, these professionals will go a long way in ensuring that as a buyer your peace of mind is not disturbed in any way whatsoever.
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Talking about the methods of property valuations there are quite a few which are being used by valuers. The methods of valuations are usually driven by the concerns and needs of the customers. However, there are many valuers who are willing to given customers valuations based on the customers specific needs and the special requirements that the properties might have. The most common method of valuation is without doubt the cost method. Here the buying cost of the land is first established. Now when a customer wants to buy a similar property the market rates are taken into account. This forms the basis on which the cost method of property valuation works out.
Revenue generation is another unique method by which the value of a particular property could be established. It is a simple method by which the revenue that the property could generate over a period of time is the main basis on which the value of a property is measured. The cost paid or payable is not taken into account.
Now coming the different types of valuations, it would be pertinent to mention here that the list quite big and it may not be possible to have a look at each one of them in this article. However, a few important ones are being discussed for the convenience of readers. The most common type of valuation is the one pertaining to simple buying and selling of properties, however big or small they may be. Here the valuer gives a report which talks about the legal standing of the property, its fair market value, information with the regard to the locality or the neighborhood where the property is situated just to name a few.
Apart from the above there are some more valuations which are also quite common and sought after. For example, whenever there is a need to value a property that is quite a few decades old, it may be possible only by going in for backdated or retrospective valuation. This is again a complicated valuation and only those having experience can do it. Compensation valuation is another valuation which also has a big demand.
One of the most common reasons why property valuation is outsourced is because it is something that can be handled only be skilled professionals who have rich experience and expertise in this filed. Property valuation is not merely about measuring properties and then coming out with a value based on such measurements. It is much more than that and there are many complications and complexities involved. It is about having the right mix of both objective and subjective information gathering and information processing.
At the end of the day if there is any professional on whom the buyer in particular places 100% confidence and faith it is the valuer. Therefore the onus is on the property appraiser to be fully accountable and live up the faith and confidence that is reposed on him. He should be willing to walk that extra mile in their pursuit of delivering only the best for their consumers. They should be willing to physically visit the property, measure the same, check the legal documents, move around the neighborhood, just to name a few. All these takes time and effort but at the same time the valuer must be geared up to submit the valuation in good time or as per the stipulations of the customers.
In many cases the valuation reports submitted by property valuers are often considered as the final word even by reputed property attorneys and advocates and also by government revenue officials. Further one has to keep in mind that there are different types and methods of valuations. Talking about types apart from ordinary valuations, valuers may have to handle complicated compensation valuations, backdated and retrospective valuations and valuations of properties of deceased persons. In many cases capital gains tax and stamp duty valuations are also dependent on the information provided by valuers in their reports.
Taking the above facts into account the onus lies on the customers to identify the right valuers having rich experience, expertise and skill set to handle even the most difficult types of valuation.
When you take up property valuation as a serious business you have to keep in mind various types of valuations that you would be required to handle. It is not merely about simple valuations where there are buyers and sellers. There could be many ownership transfer of real estate properties which could have no commercial interest or it could not be an arms length transaction so to say. Let us therefore have a look at the different types of valuations because at the end of the day, a good valuer should be looked upon as a single stop solution for all valuation related matters.
Vanilla valuations are without any doubt the biggest contributors to the valuation business,. This is a valuation where there is a commercial interest and there exists buyers and sellers who are ready to exchange some commercial considerations for such transactions. The next in the line is mortgage security valuations that come up from banks and financial institutions. These are again simple transactions but they come in much larger scale because they emanate from banks.
Now let us look at some complicated and difficult types of valuations. Whenever properties of private individuals and entities are taken over by government for infrastructure projects, there is a need to compensate the customers. This is what compensation valuation is all about and it is quite complicated valuing such properties.
The next property valuation that we will be talking about is back dated or retrospective valuations. These are mainly useful when there is a plan to buy or sell old properties. The valuers in such cases need to go back on time and find out the valuation of a property as it existed at such points in time rather than going in only by the figure that is quoted in the sale deed or other documents.
Hence, valuation is a big subject and it cannot be looked at from a narrow prism of vanilla valuations alone.
Valuation of property for an ordinary customer is without doubt a difficult subject while for professionals having experience in property valuation it is not that difficult a topic. This is because of their experience and expertise in this area which an ordinary customer lacks. Though many customers have an opinion that property valuation is only about calculating a few figures and then coming out with a report, it is much more complex than that. While calculations, measurements and computing of figures is no doubt an integral part of any reputed real estate valuers, he also has to go much beyond computing of figures using an excel sheet.
There are a number of situations where a bit of subjectivity may also be required on the part of the property valuer. When it comes to the age and present condition of the property, while there are stipulated guidelines based on which reports are made out, the valuer many a times has to use his judgment and subjectivity also. For example, the area in which the property is located has a very important role to play as far as the final valuation report is concerned. Here the valuer has to use subjectivity to a great extent. It is his observations about the infrastructure development, the quality of people who reside in the neighborhood, the amenities and facilities available by way of schools, colleges and hospitals which have a bearing on the final valuation report.
There could also be situations where the valuer may be required to give a report on a property that could be quite a few decades old. When the valuation is done using the cost method, then the valuer would be required to find out the actual market cost of the property when it was bought. This again is a very complex calculation process and would call for doing some hard work as far as backdated or retrospective valuations are concerned.
Hence, there is no doubt that valuation is not an easy subject and there hardly are any DIY methods by which properties can be valued. It is too complex and too error prone for ordinary individuals to handle.
The most common type of valuation of property that most of us come across are the ones pertaining to buying and selling of properties. Especially from the buyers point of view there is a need to value the property which he is planning to buy, perhaps by paying thousands or even millions of dollars. The need arises because the buyer would like to be reasonably sure that the price that he is planning to pay for the property is worth it. Though the market itself is a stabilizer and corrects prices automatically, the buyers would be much happier to here about the valuation from a reputed and professional valuer. Apart from the comfort factor there are also some statutory requirements that make it mandatory for valuation of properties before they are bought and sold or before the ownerships are transferred.
Coming to the various types of valuations, while the simple valuations that help buyers have a better grasp of the valuation figure is the most common, there are others too that must be taken into account. For example, even when there is no buying or selling or change in ownerships of properties, valuations do take place. This is most common when a property is taken or given on rent. Valuation of the property by a valuer becomes necessary for fixing the correct rent that is in line with the markets. Further whenever there is a need for reviewing rents, the role of property valuers becomes vital because it is based on their inputs that most of the increases in rents are decided.
Apart from the above, there is a need for valuation whenever compensations have to be paid to persons who have to part with their property because of a government law or decree. It is quite common for the local government authorities to take over some properties (very rarely though) when the need the land for construction of some social relevant projects. Further, whenever there is a need for back-dated or retrospective valuation, here too the role of property valuers becomes very important.
These valuations apart, property settlement valuation, valuations for settling property disputes in case of divorce and separation, deceased estate valuations, mortgage security valuations on behalf of banks are a few more examples where the role of valuation professionals becomes very critical to say the least.
There are a number of useful information that is available from a simple piece of sheet called the property valuation report. It is quite evident that no ownerships of properties can take place without this document. As a customer therefore it would be interesting to have an insight into this document and find out what exactly it contains. The main objective of any valuation report is two fold. First and foremost find out the legal status of the property in question and secondly give a reasonably accurate idea about the fair market value of the property. This apart there are other peripheral issues that also need to be taken into account.
As far as legalities are concerned, a valuation report shows the legal owners of the property as registered under the respective legal records held by the local government authorities. It also gives an exact measurement of the entire property and also gives details about the various other properties or structures that bound the actual property on all the four sides. It also talks about the property tax rates based on assessment made of the property. It also states the current position as far as payment of property taxes are concerned.
While the legal angle of any property is very important the market value of the property is also of equal importance. This is because when a property is bought or sold the main objective is to ensure that both the parties to the transaction see some benefit out of it. This is is possible only when they are satisfied about the fair market value of the same. This value is best provided by qualified, government approved and experienced real estate valuers who do an independent job of it before coming out with such reports.
First and foremost, whenever you are on the lookout for a valuation company or an individual, you should look only for those who are registered and approved to work as valuers under the law. This is because the valuation reports that are submitted by them have a lot of importance and legal significance and hence only qualified and experienced professionals can generate such reports.
The next important point to keep in mind their overall experience in this field. Good valuation companies should have been in this business at least for a decade if not more. Experience is a big teacher and this is very much true for property valuation. Experienced valuers would be be better placed to handle complicated valuations which otherwise would not be possible.
Valuers should be able to do valuations of properties that might be located far and wide. They are supposed to be well networked and should be prepared to visit far flung areas and examine the properties before valuing them. Further, good valuers are those who know the fair market value thoroughly as far as different areas and neighborhoods are concerned. They are also supposed to employ the best valuation tools and methods when it is about valuing a property.
Professional valuation companies offer all types of valuations under one roof. They would not like the customers to move around and shop. To cite an example, if a property valuation company can offer valuations of superannuation funds, it would do well to cross sell their products and services. This certainly will go a long way in bringing in a sense of confidence to their customers which will also work to the benefit of such valuation companies.