When a request is made for a property valuation, the applicant and others tend to ask me as soon as I have completed an inspection of the site, “So, what do you think the property is worth?”
It makes me think of a patient asking a medical doctor whether a tumour is malignant before a biopsy is carried out. In both instances it is recommended to carry out tests and analyse certain facts before stating, what may appear to others to be a quick and easy conclusion.
Some of the factors to consider are, inter alia, the attributes of the subject property vis-a-vis that of recently concluded sales of comparable type properties within the same and/or immediate area:
- Street appeal;
- Design and layout;
- Quality and condition of finishes;
- Position on the site (e.g. North facing);
- Extent of security; and
- The added features such as views, air-conditioning, under floor heating, a landscaped garden, irrigation, well-point or swimming pool.
This list is by no means complete and it could be worthwhile noting, that no two properties can be identical and consideration needs to be taken of the varying aspects as well as the prevailing market conditions.
The market value, as defined by the International Valuation Standards Committee (IVSC), relates to 7 different aspects, each which could be further studied and analysed in depth.
“Market Value can be defined as the estimated amount for which a [1. property should exchange] [2. on the date of valuation] [3. between a willing buyer] [4. and a willing seller] [5. in an arm’s length transaction] [6. after proper marketing] [7. wherein the parties had each acted knowledgeably, prudently and without compulsion].
An ‘off-the-cuff’ estimation of a property value may be somewhat inaccurate without the important factual evidence to make a calculated and logical conclusion. A short answer to the question I am asked about a property’s worth should be, “what a willing buyer would be prepared to pay a willing seller”. This may sound silly, but it is the best answer at that point in time.