Why do you need a property valuation?
By definition, the term value in the economical sense means “the desirability of something, often in terms of its usefulness or exchangeability” and the “something” shall, for the purpose of this article be, fixed property or realty.
There are many differences between the various property types - e.g. residential, commercial, agricultural, industrial etc. - but the basic principles remain the same and for ease of reference we shall focus on residential property in this article as most readers will, no doubt, be able to relate to this type of realty.
Property owners seeking to sell their property will know that before marketing the property, one ...view middle of the document...
This is all good and well as long as the CMA is performed in accordance with the valuation/assessment process as prescribed by the Estate Agency Affairs Board which states that the agent performing the valuation/appraisal, should “find and inspect suitable comparable properties which have recently been sold in the same or in a similar area ”.
With a valuation/appraisal certificate in hand, the seller no longer needs to subject himself to estate agents’ sales pitches or big promises of achievable price levels and confidently can appoint any reputable agent of his/her choice. There is also no harm in “pitching” the price a little higher than the valuation amount as a basis for negotiation.
If the property is priced correctly, i.e. true to market value, there will be little or no buyer resistance and the lending institutions will more readily grant loans to buyers when submitting an offer to purchase on such properties.
Furthermore, it remains a well known fact that correctly priced properties sell fast and that the financial and documentary processes are concluded much quicker, too.
With the acquisition of a property comes the responsibility to not only maintain it properly but also to insure the investment against fire, flooding, and other forms of loss or damage.
When insuring a property it goes without saying that it should be insured for the correct amount. The majority of cases of over- or under-insurance only come to light once a claim has been lodged as the insurance taker suddenly may find him-/herself in a financial predicament if found to be under-insured.
Any short term insurance policy contains the clause “the onus is on the insured to provide the insurer with proof of the value of the property to be insured”. The value referred to here is not the amount paid for the property, nor the balance on the home loan, nor the current market value; it is the replacement cost/value of the realty which is required in order to determine the correct insurance value. This is where most property owners err, however, unnecessarily so, as a professional replacement cost valuation/assessment, done at the time the insurance policy is taken up, will eliminate any value disputes with the insurance company in the event of a claim.
Historically, property owners have always been referred to banks for a property valuation/assessment but, gradually, estate agents have assumed this task as banks do not offer a valuation/assessment service to the general public, though reputable estate agents would not expose themselves by offering a replacement cost valuation/assessment, unless they are trained and qualified to do so. More recently, insurance takers are provided with a formula to calculate the replacement cost/value themselves.The accuracy of this exercise however, is extremely questionable. Nevertheless, people generally prefer to avoid the cost of a professional valuation/assessment and tend to choose the no-cost option without...