The professional and impartial opinion of a valuer is backed by extensive training and is often invaluable when property decisions have to be made. Property accounts for much of our private, corporate and public wealth and the determination of its value is vital to the economic well-being of a country.
Professional valuers are widely used to valuate property as they are well-informed with regards to the conditions and processes in the market place. A valuer is trained to be an unbiased third party in the process, serving to protect buyers from overpaying as well as protecting lenders from misled property buyers. A valuer's fees are not commission driven, but are charged at an hourly rate or a negotiated fixed amount. As the amount of the valuation is not directly related to the service fee, impartiality is further ensured.
The International Valuation Standards Committee, an international body with the objective to formulate and publish valuation standards, defines the market value of property as the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion.
"A valuer is a person that can assess the market, gather information, and objectively make use of logical data onto which the man in the street would attach value," says Deon Jansen van Vuuren, director of Cape Value, who has been in the business for about 25 years.
"A valuer must be able to compare apples with apples; he must be able to compare a three-bedroom house to another three-bedroom house that is fairly similar in location, building style, layout and finishes."
In his years of experience he's come to realise that there are many complex factors that need to be addressed when valuating a property. For example, buyers do not buy houses based only on the extent of the property.
When deciding on two different sized properties in similar areas that offer similar accommodation, the buyer will not necessarily buy the bigger property. One must also distinguish between the asking and selling prices, where differentiations may vary as much as 17%, especially in booming markets.
A valuer's objective should be to bring reasonability and logic back into the market where many averages exist. "The difference between replacement cost and market value is another factor that plays a role in determining value. In many cases sellers take the size of the property, multiply it with the building cost per square metre and add this figure to the land value; so replacement value is not always equal to the market value," says Jansen van Vuuren. Other factors include improvements, the locality and environment, zoning and distances from amenities.
"General qualities of a valuer are those of experience, theoretical know-how attained from the valuer's diploma, and knowledge of the area, including behaviour and views of the economic community. A good valuer will gather information and sift it. If you value a property, you are not really valuing the bricks and sticks, but the real rights granted to the property. Examples are residential rights, commercial rights or industrial rights," concludes Jansen van Vuuren.
A professional valuer must be registered with the South African Property Valuers Profession. Registration with the South African Institute of Valuers (SAIV) is optional.
Business Day
Publisher: Business Day
Source: Inet Bridge
