“Have you scheduled a property valuation?”
Hilmi, an owner in preparation to sell his semi-detached house in Shah Alam, looked up from his phone.
“I can help sell this property, but a valuer will ensure you get the best deal out of this sale.”
Hilmi, a young owner of several properties ponders and listen to his agent’s advice – as his wishes to profit as much from these sales. But why is property valuation a “must-know” for us?
So what is Property Valuation?
Property valuation provides services to an organization or an individual to determine the worth of their property – be it a row of office spaces in Kota Damansara or a townhouse in Setia Alam.
As a valuer, they will provide a fair price of any land, factory or a building based on the property’s valuation.
Property valuation will also include the estimation of;
- intellectual property-related rights
- company performance related to marketing and promotions
Right, I am intrigued, but who carries out a property valuation?
A valuer will carry out your valuation, as they’ll consider elements like the storage, age, size, wear and tear, and room layout in approximating an appropriate figure.
They’ll also look at similar properties in the area and consider what the market is like.
For example, a real estate agent wishes to sell an old couple’s home in Subang Jaya. While location comes to play, the state of the property plays an important role to provide the overall cost and price to estimate the value – thus the presence of a valuer is present.
But is there a difference between Value, Cost and Price?
Cost – refers to actual expenditures such as materials or labour.
Price – refers to the amount that someone pays for something.
While cost and price can affect value, they do not determine value. The sales price in Nilai might be RM500,000, but the value could be significantly higher or lower.
For example, if a new owner finds a serious flaw such as a huge wall crack in the master bedroom, the house’s value could be lower than the price.
Interesting but what else affects the value of a property?
Since no two properties are exactly alike, adjustments to sales prices will include:
- Age and condition of buildings
- Date of sale
- Terms and conditions of sale, such as seller were forced or if a property was sold between relatives
- Location, since similar properties might differ in price from neighbourhood to neighbourhood
- Physical features, including landscaping, type and quality of construction, number and type of rooms, square feet of space, type of flooring, etc.
When will I need such services for Property Valuation?
Buying or selling property – Even if you wish to rent any property, property valuation becomes important. The rent of a property is usually 6–10% of the estimated price of a property.
To mortgage a property – It is important when a buyer wishes to seek a loan against the property valuation’s security and done in case a loan for construction of a building is required.
For transfer of property – If you wish to transfer your property, you will need to estimate the property’s value as the stamp duty is calculated based on the worth of property.
For taxation purpose – Taxing season around the corner? No worries, we got you covered. Taxes include wealth tax, municipal tax, property tax, vacant land tax, ground rent tax, etc. An individual has to pay for various government departments.
Compulsory Acquisition – If you are unfortunate to declare yourself bankrupt, the surveyor compulsory acquisition or auctioning off the property is made. In such a case, the valuation of a property is important.
At the end, which one matters most?
While skilled professionals generally perform valuation, anyone involved in a real transaction can benefit from gaining a basic understanding of the different methods of real estate valuation.
With accurate real estate valuation, it is important to mortgage lenders, investors, insurers and buyers, and sellers of real property to make the sale of a lifetime.