Property Valuation Process
All property valuation process needs to be carried out by authorized firms. They are registered property valuer with the Malaysia Board of Valuers, Appraisers, Estate Agents and Property Managers. Property valuation means getting an estimate of the worth of a property at the time of the valuation. The registered valuer shall furnished a Valuation Report which is a written document of a valuation to the client. Based on Malaysian Valuation Standards (MVS) 2019, a Valuation Report must conform to the requirements of MVS 8 (Valuation Reports). A Valuation Report given in a manner different from a full report, must conform to the requirements of MVS 13 (Update Valuations). The following guide highlight the five important steps undertaken in a normal property valuation process.
1st Step: Agree on the Terms of Appointment & Scope of Work
Property valuation process begins with the client and the valuer agreeing on the terms of appointment and scope of work which then form the contract between the two. This initial step is very important. The terms must therefore be clear to avoid unnecessary misunderstanding.
2nd Step: Provide relevant Information & Documents for Verification
In the second step of property valuation process, the client shall provide all relevant documents to the registered valuer. For example, title, survey maps, building plans and others. These must be verified through searches at the relevant offices such as Lands Registries, Local Authority Registries and Survey Offices. However, searches are known to take as long as a few days and in extreme cases much longer. This stage can run concurrently with the third step below.
3rd Step: Inspection of the Subject Property
In the third step of property valuation process, the registered valuer shall carry out physical inspection of the property. The valuer will take note of all the attributes of the property, taking measurements and confirming the property location as per the survey map. The valuer will also take note of the neighborhood characteristics at this stage. The time frame here depends on the size of the property and the valuer experience of the neighborhood. These process may need to take several days.
4th Step: Data collection, analysis and computation of the Market Value
The valuer shall gather as many as possible information such as recent sales, rentals and construction cost data. The information is analyzed and applied to the subject property to arrive at the values. These are reconciled and a final value estimate is made. This fourth step of property valuation process may take several days to a few weeks, depending on the size of the property.
5th Step: Reporting Opinion of the Market Value
This final step of property valuation process refers to the compilation of the report, proof reading and submission. Depending on the type of the report this may take several days. In special cases especially for larger property and technical reports, a draft report may be presented to the client for comment and feedback before the final report is issued.
Conclusion
Currently in Malaysia, all the property valuation report shall be based on the 6th Edition of the Malaysian Valuation Standards (MVS 2019). In general, the property valuation report will consist of the following details.
- Purpose of valuation.
- Subject property (the property being valued).
- Date of valuation.
- Title particulars.
- Details of property (location, property market condition, state of repair, lease details and others).
- Basis of valuation (market value, forced sale value, fire insurance value and others).
- Appendix (location plan, floor plan, photographs of property including internal, external and surrounding).
- Copy of documents (Sales & Purchase Agreement, Title and others).
Nowadays, clients may have valuation instructions that are increasingly dictating the way valuers do property valuation. The logic is that by insisting in the valuation instructions, the valuer will follow certain property valuation process and its relevant standards. In short, they will be able to complete the valuation exercise.
A professional well prepared valuation exercise requires a clear instruction from the clients with transparent sharing of relevant information for valuers to conduct a thorough due diligent on the Subject Property and derive an objective Market Value in compliance with their professional standards.
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