| How much is your house worth? The price of a | | | | a valuation report. Therefore, this approach should be |
| property may not necessarily reflect its value. To get | | | | adopted when seriously considering sale of your |
| an idea, engage a valuer empanelled with a | | | | property, as the stakes are high and the accuracy of |
| professional body | | | | the `market value' will determine your financial gains. |
| Sachin Sandhir | | | | A professional valuation, backed by consistent |
| For a majority of citizens residential property | | | | valuation standards, is a thorough exercise conducted |
| represents their single largest financial commitment. | | | | by a competent valuer who will spend time collecting |
| Built with huge sums of hard earned money, homes | | | | data, inspecting the location and property and a |
| are something that every individual takes pride in, | | | | thorough due diligence of all important legal, economic |
| which is often reflected through notional value. To | | | | and financial aspects. Some aspects that form part |
| get information, people will have discussions about | | | | of a professional valuation and which will significantly |
| the same in their social circles, among family and | | | | impact the property values include: Freehold and |
| relatives. These create speculation and curiosity | | | | leasehold property Land value: This forms a major |
| amongst people, even who have no intention to sell, | | | | component of the overall property value, the extent |
| to know what their property is worth. While people | | | | to which verification of land records and title deeds |
| tend to use the terms price, worth, and value | | | | was incorporated as part of the valuation report, is |
| interchangeably, these differ in meaning and | | | | laid down in the `scope of work' and `assumptions' |
| implication. The price of a property may not | | | | for estimating the market value. |
| necessarily reflect value, which is governed by | | | | As is: The value of the property in the "as is" state |
| various other factors and considerations. Therefore, | | | | Highest and best use: This is the process used to |
| when selling, it is essential to determine the value of | | | | determine property use which is legal and yet |
| property. | | | | produces the highest value for land Cost approach: |
| An informal and simple way to determine value is to | | | | The value of the building is based on how much it |
| approach a real estate agent, who provides | | | | would cost if one was to construct the property |
| comparative data on similar properties that he has | | | | today; this approach is more relevant and applied in |
| transacted in and the rates at that point in time. | | | | case of newly built properties Sales comparison |
| However, this value is only an estimate and should | | | | approach: A comparison of the purchase prices of |
| not be considered as the `market value'. | | | | similar properties that were sold in the recent past is |
| In order to get a true picture of all economic/financial | | | | considered; upon data collection, upward/downward |
| aspects of a particular property, it is advisable to | | | | adjustments are made, to account for differences in |
| engage a valuer, empanelled with a professional body, | | | | year built, construction quality, condition of the |
| to determine the `market value' of the property. | | | | property; attractiveness of location, lot /apartment |
| RICS accredited valuers carry out credible valuations | | | | size, available facilities and other such factors Given |
| based on the RICS Red Book of Valuation Standards | | | | the level of activity in the residential space, it is |
| and are, therefore, considered as the mark of | | | | essential to institutionalise valuation standards. These |
| professionalism worldwide and across India. | | | | coupled with higher professionalism in this practice, I |
| Valuation is a soft science involving high level of | | | | am certain will ensure that valuation of land and |
| judgment where different assumptions lead to | | | | properties will no longer be artificially inflated and this |
| different values. Considering the risks associated with | | | | will contribute significantly in containing land prices, |
| valuation tasks, meticulous application and specialised | | | | which are very important when it comes to providing |
| skills are required, which come at a cost --the cost of | | | | homes at affordable prices. |