In summation, the term real estate refers to the
totality of all the things that make up the whole world – the air, sea and
ocean, land and buildings, sky, forests, rocks and mountains, infrastructural facilities,
plants, machineries, equipment, tools, furniture and fixtures, mineral resources
beneath and above the earth surface, etc.–including mankind (Gen 1 vs. 26-28).
Property Valuation in real estate practice terminology
refers to the process or exercise of estimating or assessing the monetary worth
or value of a particular interest in land and/or landed property for a specific
purpose, in a particular location and within a stipulated time frame.
There are so many reasons and purposes why a real property
valuation exercise is embarked upon amongst which are;
·
Sale
or Purchase
·
Probate
·
Auction
·
Compensation
·
Rating
and/or Taxation
·
Balance
sheet
·
Insurance
·
Mortgage
·
Going
concern
·
Loan
advancement
Before a real estate valuation exercise can be
undertaken, the professional Estate Surveyor and Valuer appointed for the
exercise owes it a duty to establish the reason or purpose for which the property
valuation exercise is needed as it is by this he/she will be able to apply the
required basis of value and necessary valuation methods
in arriving at his/her opinion of value.
The conventional five (5) different valuation methods
that can be adopted by a professional Estate Surveyor and Valuer when carrying out
a real property valuation report exercise are;
·
Comparative/Comparison
Method
·
Residual
Method
·
Cost/Contractor’s
Method
·
Investment
Method
·
Profits/Accounts
Method
One or more of these five (5) conventional valuationmethods
can be adopted by the Estate Surveyor and Valuerwho is undertaking a property valuation
report exercise in arriving at the best opinion of or assessed value of the property
based on his/her discretion, experience and skills.
CONTENTS OF A VALUATION REPORT
A real estate valuation report or certificate is a
professional and legal document which explains the rigorous and analytical
processes undertaken in carrying out a property valuation exercise and which
presents well detailed and meaning information used in the analysis that led to
the opinion of value been arrived at by the professional Estate Surveyor and
Valuer.
The following items/elements must be found in a real
estate valuation exercise report before it can tenable as well as regarded as a
comprehensive professional document written by a competent and professional
Estate Surveyor and Valuer who is a member of the Nigerian Institution of
Estate Surveyors and Valuers (NIESV) and alsoduly registered by the Estate
Surveyors and Valuers Registration Board of Nigerian (ESVARBON) to carry out
professional real estate surveying and valuation practice in Nigeria.
1.
Cover
letter/Information
2.
Location
of real estate to be valued
3.
Neighbourhood
Characteristics
4.
Site
Description
5.
Construction
Details of Buildings
6.
Accommodation
Details
7.
Utilities
and services provided on the real property been valued
8.
General
condition of the valued real property
9.
Tenure
10. Date of Inspection/Valuation
11. Purpose of Valuation
12. Assumptions
13. Basis of Valuation
14. Method of Valuation
15. Opinion of Value
16. Caveat/Limiting Conditions
17. Official stampand signature of the
professional Estate Surveyor and Valuer
The elements/items identified above are what make up
a detailed and comprehensive real propertyvaluation report.
A professional real estate/property valuation report
constitutes the end product of a rigorous process of collecting, collating,
calculation and analysis of data by the professional Estate Surveyor and Valuer
in arriving at his/his opinion of value/worth of the property been inspected or
valued and whose outcome is very important to the client.
To know the monetary worth or value of any class of
properties for whatever purpose(s), it is mandatory and compulsory to always
embark on the services of the Estate Surveyor and Valuer as he/she is the
professional that have been trained in the art and science of real estate management
and valuation as well as duly registered by the Estate Surveyors and Valuers
Registration Board of Nigeria (ESVARBON) via the Nigerian Institution of Estate
Surveyors and Valuers (NIESV) to carry out estate surveying and valuation
practice in Nigeria.
This article is very important for all those that
require the services of professional Estate Surveyors and Valuers, as well as
those preparing or sitting for the Nigerian Institution of Estate Surveyors and
Valuers (NIESV) Professional Qualifying Examinations (PQE 1-3) and the
Professional Practice Examination (PPE) Certificate.
ABOUT THE AUTHOR
Adeniyi
Akinjiyan has a Higher National Diploma (HND) in Estate Management from the
prestigious Yaba College of Technology, Yaba, Lagos state, Nigeria. He also possesses
a Professional Practice Certificate in Estate Surveying and Valuation from the
Nigerian Institution of Estate Surveyors and Valuers (NIESV).
He is the
principal consultant at Aakient Consultants Ltd, a highly progressive and
consolidated property and construction project management company, which is
committed to providing the highest level of professional services in meeting
clients’ real estate needs.
Feel free to
contact him at: aakientconsultants@gmail.com
