8/7/2019 Applied Valuation

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Chapter 1 : Revisiting Valuation Principle

Characteristic of Property Market Highcostoftransfer Heterogeneity(2propertyneverhavesamevalue) Indivisibility(Difficulttobedivided) Specialproblemofmanagement Specialrisk Perpetuity(Permanent) Imperfectknowledge(Difficulttogetinfoaboutproperty) Decentralisedmarket(Nospecificplacetosellproperty) GovernmentinteractionWhy The Va lua tion is Exists?

Forsaleandpurchase Forloansecurityandsalebypublicauction Forinsurance Forcompanyaccountandfinancialstatement(Assetreport) Forcompulsoryacquisition(Ifgovernmentwanttobuyourproperty)

Forratingpurpose(Tax)What is Valua tion? Itisanassumptionopinionsastocapitalorrentalvalueonanygivenbasisinrespectofaninterestinpropertywithorwithoutanyassumptionsorqualification(Manualofvaluationstandards)

Who Can Conduc t Valuation? IntheValuers,AppraisersandEstateAgentsAct1981(Act242)and

rules

clearly

stated

that

the

applicator

should

comply

with

thefollowingconditions:Level1:ProbationaryValuer ApersonwhohaspassedtheexamsprescribedbytheBoardorhasqualificationwhichtheBoardrecogniseasequivalenttosuchexamsmayapplytotheBoardtoberegisteredasProbationaryValuer.

Level2:RegisteredValuer ApersonshallberequiredtoobtainthepracticalexperiencesandtopasstheTestofProfessionalCompetenceprescribedbytheBoardoranyequivalenttestofexamrecognisedbytheBoard.

Apersonhasattainedageof21yearsold,soundmind,goodcharacteristicsandhasnotconvictedofanyoffenceinvolvingfraudordishonestyormoralturpitudeduringthe5yearsimmediatelyproceedingthedateofhisapplication(MakeadeclarationintheformandmannerprescribedbytheBoard)

NotundersuspensionfromvaluationorestateagencypracticesnorhashisnamebeencancelledfromtheRegisterofValuerandAppraiser.

Date of Valuation Marketvalueisdefinedastheestimatedamountforwhichaassetshouldexchangeonthedateofvaluationbetweenawillingbuyerandwillingsellerinanarmslengthtransactionofferproper market (Manypotentialbuyers)wherein thepartieshadeachactedknowledgeably,prudentlyandwithoucompulsion.

Process of Valuation Definitionoftheproblem:Purposeofthevaluation,dateofopinionofvalue,characteristicsofproperty,assumption,hypotheticalconditions.

Scopeofwork:Inspectionandsurveyoftheproperty. Datacollectionandpropertydescription:Marketareadatasubjectpropertydata,comparablepropertydata.

Dataanalysis:Marketanalysis,highestandbestuseanalysis Landvalueopinion Applicationoftheapproachestovalue Reconciliationofvalueindicationandfinalopinionofvalue Reportofdefinedvalue