Find out how important the valuer’s role is when it comes to your property
The first step to understanding what is in a valuation report, is knowing the role that the valuer has. Ultimately, the valuer’s role is to provide independent advice, based upon research and experience.
The role of a valuer isn’t a new one, the role goes way back to 1948, when the Valuers Act was written. Since then, every registered valuer must abide by the code of ethics and meet the requirements in the Valuers Act.
Why use a registered property valuer instead of a real estate agent?
While a real estate agent can provide a residential property appraisal, they do not provide the same independent report that a qualified property valuer does.
‘Independent’ is one of the major differences here, as a registered property valuer has a responsibility under the Act to provide an accurate and independent report. A real estate agent provides an appraisal and marketing advice on what they believe a property will sell for.
Because a qualified and registered valuer is independent and unbiased, they are trusted to provide the most:
- accurate and independent advice
- accurate findings based on extensive research, and relevant factors to consider when valuing your property.
What does a registered valuer think about when writing a residential report?
The valuer has a large number of standards and ethics that outline what should be included within any valuation report. As no two properties are identical, the nature and content of the report will vary depending on the property type.
The valuer will consider the land, improvements and all the features of the property and then research properties with similar features and characteristics. Rarely are two properties the same, therefore the valuer’s experience in analysing the market evidence is key.
Here are a few key things you will find in a residential valuation report
- Instructions: this will include relevant dates and a scope of works outlining what the valuer has considered within your valuation.
- Property description: this will always include reference to a title or ownership interest, land, location, zoning, services, and improvements.
- Improvements: this will include references to the size, age, internal layout, views, materials and condition of the building. The valuer provides comment on whether the physical improvements are suited to the location and zoning, thereby being highest and best use.
- Comparable sales: the valuer will consider market transactions and, as no two properties are exactly the same, the valuer will need to apply analyses and in-depth market knowledge to determine a market value.
What’s not covered in a residential valuation?
- A structural survey, identification of water tightness issues, and identification of potential contaminants, such as asbestos. These must be undertaken by a Building Surveyor.
- The valuation does not confirm that the property complies with local authority requirements.
A registered valuer’s approach
A residential valuation may include one or more approaches to assess the market value.
Each approach looks at similar market trends to value the property and carry either an equal or varied weighting in the final assessment. This weighting will be determined by the type of property that is being valued and its relationship to the evidence identified in the valuation report.
There are three general approaches utilised in valuation reports:
- Direct comparison: this is a direct reference to other market sales and the sales are analysed to reflect the trend of the market.
- Income approach: this is generally applied to investment properties and looks at the benefit of ownership, being the cash flow generated. A market level of return is derived from the market activity.
- Cost approach: this considers the land value plus the added value of the improvements. Some properties can be more costly to build and items such as additional foundations, retaining walls and the overall specifications need to be compared to other new or similar properties, as well as the market conditions.
TelferYoung, passionate about valuations throughout New Zealand
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Posted 1 year ago