Reasons for valuation
Most valuation assignments are for financing purposes, wherein the property owner ( or buyer ) applies for a bank loan and offers to charge the asset to the bank as security to the loan. However, valuers may be appointed for other, more challenging reasons that often require additional skills and experience.
Some of the reason include :-
- Funding - In consideration of granting an individual or company a loan or banking facility, the lending bank normally required ' adequate security ' from the borrower in the form of a property asset that it can foreclose and sell by auction in the even the borrower fails to repay the loan sum an interest. The bank normally require the property to be assessed by a professional valuer on its panel prior to granting the loan or banking facility, to make sure the security offered is worth more than the loan sum sought.
- Sale of property - Both a buyer and seller may want a professional opinion of property's market value before entering into negotiations. This is to ensure that the seller does not over-price the property, or that the purchaser does not under pay for it.
- Tracking property values - Some clients, especially the wealthy, may want to know their real nett-worth and for estate planning and strategic purposes, may want a periodic valuation of their assets.
- Stamp duties - When properties change hands, the Federal Government levies a tax known as Stamp Duty, payable by the purchaser or transferee based on the market value of the transacted property. Purchasers would require the transacted property to be valued in order to determine the market value for stamp duty payment.
- Family law settlements - In the even of divorce, incapacity, or death an to facilitate the equitable distribution of property assets, the affected spouse or beneficiary, or even the court ( if a legal tussle is involved ) would require the assets to be valued.
- Foreclosure - When a bank exercises its right to foreclose on a property in the event of default by the borrower, it would require the asset to be revalued to determine the ' reserve price ' prior to its sale by public auction.
- Land Acquisition - When the Land Administrator exercises its power to acquire private property under the Land Acquisition Act, the owner and tenant of such property may need to appoint a registered valuer to evaluate the amount of compensation damages they can claim from the administrator.
Often the biggest investment for most people, house buying is also an area when they have little knowledge in undertaking. If there was a school that taught the right movers to make…
From the school of hard-knocks, here are some “dont’s dos” as offered by a United States based realtor Lending Tree LLC:
1. Don’t go it alone Buying a home is a complex process, requiring knowledge about everything from real estate values to legal matters and insurance. You will need advice you can trust, so set a team to assist you – one that includes professionals such as lawyers, estate agents and friends in the know.
2. Don’t buy a first sight While love at first sigh may be fine in romance, it is so when putting hard earned money into a house. Make a list of your needs and wants, and compare it with how well the house meets them. Checkout the neighbourhood at different times of the day to learn about noise an traffic patterns; whether there are schools nearby (even if you don’t have children, schools nevertheless add value to a locality) and other facilities and amenities you require.
3. Don’t think you own the bank have a clear idea of how much you can spend before you go looking. This will save you the hassle of failing in love with a house that’s out of your price range. Checkout your credit rating with your bank and get the officer to work out how much of a loan you can obtain.
4. Don’t overbuy You may able to borrow more, but can you afford to? Analyse your monthly expenses. As a general rule, your total monthly debts, including your mortgage, should not exceed 50 per cent of your gross household income.
5. Don’t misplace your trust Never get carried away or become emotional about a transaction. Event if the estate agent or the seller is a great friend, or a charming personality, never forget that for them, this is serious business. Be an active, informed participant in the deal by doing your own research from various sources. Find out how you support team can assist.
6. Don’t accept oral agreements Never depend on what is agreed orally! Get it write and get it in writing, from the beginning. Buying a house is a legal transaction, and written contract apply, not verbal agreements.
7. Don’t overlook the fine print You need to understand what you’re signing. Furthermore, although time is of essence when it comes to making an offer or buying a house, never be rushed into it. Get all documents, read and fully understand them and raise questions to clarify doubts before signing on the dotted line.
8. Don’t make an unconditional offer Never be tempted to throw caution to the wind once you’ve found a great house, no matter how excited you are about it. Remember that even if the bank says you’re qualified for a certain amount of loan, it is still left to the bank whether it will accept the house as collateral. Is the unit worth the amount of loan to be released? What does the valuation report say? In the case of completed property, it is advisable to have it inspected by a home inspector before you commit.
9. Don’t have house buyer’s remorse No place is perfect, so don’t miss out on a great house in the market in your search for the perfect one!
