17 CONTENTS OF A REAL PROPERTY VALUATION REPORT

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