At Oakwood we have delivered hundreds of professional valuations since we started over four years ago, yet to many clients what we do remains a mystery – is it science or is it an art?
Whilst we do some Market Appraisals (often termed valuations) for property sales, most of our work is formal valuations under the auspices of the RICS Red Book. Our work is therefore well regulated and undertaken in a prescribed manner.
We provide formal valuations for a raft of purposes, including taxation, secured lending, Charities Act and matrimonial matters (often as a Single Joint Expert). It is a requirement of the Red Book that our valuations are based on evidence that we must carefully assess and compare to the subject property. The days of simply “knowing” the figure have long gone.
In this article we consider some of the issues that clients need to consider.
- Market Value: Clients are usually interested in the market value of the property. This is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction. Market Value is generally stated on a particular date; in some cases, this may be retrospective, especially for inheritance tax purposes.
- Factors Influencing Value: Clients may want to understand the factors that contribute to the property’s value. This could include the property’s location, size, condition, features, and the area in which it is located.
- Comparables (Comps): Clients require information on comparable properties that were used in the valuation process. These are similar properties in the same neighbourhoods that have recently sold, and their sale prices help determine the subject property’s value. For more unusual properties, the range of comparables will be greater than for more regular properties.
- Market Trends: Clients require data on market trends that could impact the property’s value. This includes information about the local real estate market, economic conditions, and any upcoming developments in the area. Global matters such as lockdowns, interest rates and wars need to be referenced.
- Property Specifics: Clients will want detailed information about the property itself, such as its size, layout, age, condition, and any unique features that could affect its value. Reports may vary with provision of detail depending on who the client is; if the client is very familiar with the property then less information may be provided.
- Methodology: Clients will need an understanding of the methodology employed by the valuer. This could involve information about the approach used (e.g., Market Approach (comparison method), Income Approach (investment method) and the reasoning behind the chosen method. The valuer should show their workings.
- Improvements or Repairs: If there are any significant improvements or repairs needed, clients would want to know how these factors may impact the property’s value.
- Legal Considerations: Clients will be interested in any legal considerations or restrictions that could affect the property’s value, such as planning regulations, easements, or encumbrances.
- Purpose of Valuation: Understanding the purpose of the valuation is crucial. Whether it’s for buying or selling, mortgage purposes, tax assessments, or other reasons, the valuation process can vary based on the intended use. For example, some lenders request valuation figures subject to restricted marketing periods (e.g. 90/180 days)
- Timing: Clients need information about the relevance and timing of the valuation, especially if market conditions are changing rapidly. Potential changes in interest rates of tax regimes may affect the valuation.
Much of the work we do at Oakwood is instructed by solicitors, often in connection with Court proceedings, although we also work with private individuals and a range of business clients.
We’re always happy to have a chat about a client’s requirements prior to instruction to make sure we can help and to ensure that the client gets the best attention. If you require a property valuation let us provide a quote. We have experts in agricultural, residential and commercial property.
Call today on 0161 941 4228 or email: enquiries@oakwoodpropertyservices.co.uk
