There is no denying the fact that buying a home is without any doubt one of the most important decisions that one takes in his or her life. For many it is a once in a lifetime decision. It has to be therefore very carefully evaluated and a lot of due diligence process has to be gone through. The entire process should start with the task of identifying the right property, the right seller, the right location and also it should be bought at the right time. Having a marriage of all these requirements is not an easy job and it takes a lot of skill do it.
Once these requirements have been fulfilled the next job is to find out the right bank or financial institution for funding the entire real estate purchase. This is not an easy job because a lot of factors have to be taken into account while taking a loan. The credit history has to be good, the repayment capacity has to be factored in and last but not the least the bank should find your application suitable for a mortgage loan. Banks usually go through various due diligence processes and property valuation is something that is extremely important.
Hence, before you even apply for a home loan it would not be a bad idea to take the help and assistance of a property valuer. They will be able to give you a clear indication about the fair market value of the property in question. You can rest assured that your bank will also go through this due diligence process and in fine the amount of funding, the repayment tenor, the rate of interest and other parameters would be decided by the valuers report. Hence you should be sure that there is near perfection between the valuation report submitted by your valuer and the valuation report that has been brought out by the bank. In most cases it would be almost similar and if there is any discrepancy you have reason to take it up with your banker. However, it would be wrong to assume that all bank valuation report are understated or that there is some bit of doctoring that is done on it.
Further the valuation report would also be very useful for you to have some subjective information about the property in question. The details with regard to infrastructure, amenities and facilities will certainly be of use.
For any real estate buying or selling, there are quite a few processes that have to be gone through. Property valuation is also one such important process which helps the buyers and sellers in more ways than one. While the main objective of any property valuation report is to give the stakeholders the correct information about the fair market value of the property, there are a number of other pieces of information that are also available. There are also some legal aspects of the property which are also a part of any good property valuation report. In this article we will try and find out how the entire process of property valuation is carried forward once there is request emanating from customers.
The usual process starts with a manual inspection of the property. This is mandatory in most of the cases though there could be some valuers who could just go in for desktop valuation. This is nothing but valuing the property based on documents and other details available. However, it is always advisable to manually inspect the property so that the right picture could be available. In many cases some shocking surprises like easements, covenants and other encumbrances have come to light only though manual inspection of the property. Such manual inspections also give a chance to the valuers to compare the actual details with the details available in the property document.
Once the physical examination of the property has been completed, the next job is to generate the report. This is perhaps the most important and significant part of any valuation professionals’ job. The report should contain as many details as possible and should not just restrict itself to the fair market value of the property. It is therefore quite common for professional property valuation reports to have information about the quality of the neighborhood, the development of infrastructure, the quality of people who make up the neighborhood, the availability or absence of various amenities and facilities just to name a few.
Further valuation reports also make a mention about the legal status and the registration details of the property. They also look into current state of payment of duties and levies and if there is any due the same also gets reflected in the valuation report. Hence, apart from the basic figurative details there are quite a bit of other information that is of importance to the buyers in particular.
If you are a reasonably logical and straight thinking customer, you would certainly understand that property valuation is very important and cannot be taken for granted. There are many reasons why property valuation occupies such an important place. First and foremost, whenever a property is bought or sold there is a need to value the same. The purpose is to find out more about the fair market value of the same. This value is of great interest to both buyers and sellers. Further there are a number of other interesting information in valuers’ report that many buyers find very useful. For example quality valuers report talk about the infrastructure development in the locality, the availability of various amenities to just name a few.
While arriving at the fair market value of the property there are different methods that are used by valuers. While the basic objective of each of these methods is to arrive at the fair market value, the tools and techniques adopted could be different. Equity and the ability to leverage the property at a future date in time are important points to be kept in mind while coming out with the right method of valuation. Equity is nothing but the price at which the property was bought earlier and the value that it commands now. The higher the difference between the two and better is the equity. Hence, the current equity of the property is one of the most common methods used by valuers to arrive at the fair market value of any real estate property.
Income or investment method is something that is often used by property valuers. This is nothing but taking the cost of the property and comparing it with the possible rental income from it over a period of time. This helps find out whether the property will make a good investment over a long term perspective. Apart from the above, the revenue realization method is also followed by many valuers. This is again not very complicated. It is about trying to find out the sale value of the property and compare the same with the actual cost of the property. The difference is what is taken into account. Obviously the higher the positive difference between the current value and original price, the higher will be the value of the property. This method of valuation is particular very useful for retail investors who would like to use land as a means to multiply their wealth and get good returns on their investments.
While there is no denying the fact that property valuation forms the crux as far as smooth transfer of ownerships of properties are concerned, it is quite challenging for customers to identify the right service providers. On the hand there is a big proliferation of valuers and it is quite likely that each customer would be able to find a couple of them at every road bend. Secondly, most of the customers are not aware about the various attributes that go in making a good property valuer great. Further it would also be not wrong to mention here that many customers are not aware of the importance and significance of property valuation especially when there is a need to transfer property ownership from one person to the other.
Whenever there is a need to transfer of property ownership from one person or entity to another, one has no other option but to seek the help and assistance of property valuers. This is because as buyers and sellers we would like to be certain that we are entering into the transaction on the right terms. While the market can indicate a rough value of the property in question, when it has the stamp of authority of property appraiser, it has more authority and acceptance. Furthermore, a professional report from a valuation company or individual also has some other useful purpose. For example, if there is a need to calculate property tax, then it is the valuation report that comes into the picture. It is the basis on which the property tax is calculated. In the same way whenever there is need to have a fair idea about the stamp duty payable, here too the property valuation report helps a lot. Hence, apart from helping buyers and sellers there are also a number of government departments which depend on valuation reports.
Selecting a good valuation company requires us to follow some simple basics. First and foremost any valuation company that calls itself professional should have a certificate to run its business. Secondly, it must be run by professionals who are not only experienced but also are qualified as valuers. Thirdly, a good reputation and goodwill are the basic foundations on which any business is built and the same applies to valuation businesses too. Last but not the least, timely service, reasonable pricing are also attributes that make a good valuation company a great one.
Choosing the right valuation company or individual is extremely important. This is because valuation is a very important process. Unless it is completed to the full satisfaction of the law makers it is unlikely that the property ownership process will happen smoothly. Therefore as a customer it is important for you to choose the right service provider. This is not very easy because there are literally dozens of valuers out there. Choosing the right one from amongst a crowd could be quite difficult unless you know how to go about it. We will try and shortlist some simple tips and guidelines that will help customers to choose the appropriate valuer so that efficiency and competitiveness go hand in hand.
First and foremost, as a customer you should always look for a valuer who has enough experience in this field. Experience is very useful in this field because it enable the valuers to handle even the toughest of valuations with ease. Further as a customer you must always look for valuers who can offer the entire gamut of valuation under one roof. This is because one valuation might be followed by a more complicated valuation. Hence to enable smooth valuation it is always better to look for valuers who have experience a wide variety of appraisals.
The next important tip to choose the right valuer is to always look for those professionals who are certified and have the required qualifications. Getting the valuation job done from uncertified appraisers is illegal and could land customers in trouble. Further it has also been found that those valuers who are qualified are in a better position to handle event the toughest valuations with ease. They are better equipped to answer to queries put forward by customers.
Timely submission of return and reports is another important attribute of a good valuer. Each and every valuation request has a timeline attached to it. It is therefore important for valuers to strictly adhere to timelines set by their customers. At times the timelines could be tough to achieve. This is where the capability and skill of the valuers is tested to the hilt. Last but no the least being competitive in price is also extremely important. However, in the guise of offering cost effective valuations, many valuers compromise on the quality. As customers it is always better to stay away from such service providers because quality is of paramount importance when it comes to property valuation.
Before understanding the various things to keep in mind while valuing a property, it would be important to understand why valuation is important and what the purpose is behind it. The main purpose of valuation is two fold. Firstly, property valuation is done to get the right information regarding the fair market value. This plays a big role especially in the mind of the buyer and he decides whether to go in for such purchases or not. Secondly, another important role of valuation is to find out more about the quality of neighborhood around which the property is located. It also throws light on the stage of infrastructure development in the locality and also shares information about the availability or absence of various amenities and facilities.
Now that we have a reasonably good idea about property valuation, it would be pertinent to have some basic idea about the various points to keep in mind while going in for valuation. To begin with, it is important for the valuer to have the right qualification and certification so that he can handle any type of valuations. While some property valuations could be simple, there could be others that are extremely complicated and complex. For example, backdated or retrospective valuations are considered very complicated because it calls for going back in time and digging out old records. While some records may have been digitalized there could be quite a few records that have to be manually found out. So a good valuer is one who can handle any type of valuation quite easily.
Further, good valuation is all about adhering to the timelines set by the clients. All valuations have a timeline attached to it. While some timelines could be quite simple and easily doable, there could be others where the deadlines could be quite demanding. A good property valuer is expected to meet the deadlines however difficult and challenging it might be. It is also important for valuers to understand the need to adopt the right method of valuation. This would depend on a number of factors such as the age of the property, the purpose for which valuation is being sought and so on. Last but not the least, good valuers must offer their services at affordable rates.