THE NEED FOR VALUATION IN REAL ESTATE TRANSACTIONS
THE NEED FOR VALUATION IN REAL ESTATE TRANSACTIONS.
Real estate appraisal, property valuation is the process of developing an opinion of value for which an asset should reasonably exchange on the date of valuation between a willing buyer and seller in an arm’s length transaction after proper marketing wherein parties had each acted knowledgeably, prudently and without compulsion. The process of negotiating, agreeing, and executing the transfer of the real estate, though, can be long, complex, and fraught with risk for both sides and it’s glaring that the endpoint is to exchange money for landed property, therefore there is a need to know the worth of an asset before investing or cashing out. Valuation of assets is therefore necessary in real estate transactions.
WHAT SHOULD THE BUYER OR SELLER DO?
After deciding to either buy or sell a property, get a property valuer to estimate the market value of the property to peg your limit in terms of expected income or outgoing. The valuer will inspect the property under your instruction, take necessary details as highlighted below and give a comprehensive report.
CHECKLIST FOR VALUATION INSPECTION
1. General check: Inspection and measurement of the asset, inventory of the details, and record of the types of components (floor, wall, doors, windows, ceiling, roof) as well as the accommodation details.
2. Health check: The dilapidation state taking into consideration obsolescence, wear, and tears, leakages, etc.
3. Legal check: Reading and interpretation of the title document, standard of building, zoning, etc
No two properties are the same even though they share similarities. Valuers value to estimate and quantify the uniqueness of one’s asset putting into consideration the property market, willing seller and buyer, economic importance, location, accessibility, demand and supply, neighborhood characteristics, services, quality of finish, etc.
IMPORTANCE OF PROPERTY VALUATION IN REAL ESTATE TRANSACTIONS.
Real estate is capital intensive, and it is advisable to undertake valuation before venturing into its transactions in other to forestall divestment. Valuation is in real estate transactions is necessary to determine the worth of assets in other to make profitable and viable financial decisions either as a buyer, seller, investor, lender, insurance, and broker.
- To a seller in real estate transactions, valuation will help determine the value of the property and the price it should be listed or advertised in the market.
- To a potential buyer in real estate transactions, valuation will help you determine the amount to pay for the property and the duration to recoup your capital. Hence, protecting you from paying an excessive amount for an asset.
- Valuation will also mitigate against the loss of funds for the financier in real estate transactions because it will protect the bank or financing company from financing a property or asset that the worth is less than the amount it invests in.
In summary, property valuation is an important concept in real estate investment; it helps to ascertain how much property taxes and property insurance to pay.
The process of buying and selling your property can be full of potential roadblocks. If you are looking to make more efficient your sale or purchase of property, consider working with us @ Brokerfield Real Estate Services where our brokers have an understanding of the real estate market, investment analysis and also leverage on our in-house valuers.
ESV. OYEDOKUN EUNICE, ANIVS, RSV
MR. ADENUGA ADELOLA, ANIVS