Property valuations – what do I need to know?

Winfields Surveyors Tower Bridge

Recently, Winfields Surveyors London office has been approached by clients concerned about the accuracy of valuations undertaken by other valuers. Upon investigation, it has been discovered that some of these valuations were conducted by non-specialist valuers and at an unusually low cost, sometimes less than a couple of hundred pounds. In such cases, the valuation report often needs more skill and time allocated to analyse the comparable evidence.

In this article, we will delve into producing a professional valuation report, which includes several stages.

Firstly, during the initial enquiry stage, it is crucial to understand the client’s circumstances, the purpose of the valuation, and the nature of the property to be valued to determine the scope of work required and provide a realistic and competitive fee proposal. Once the client agrees to the fee proposal, formal terms of engagement will be sent out. It is important to note that the RICS and IVSC require valuers to have written terms of engagement for all instructions.

Secondly, the inspection stage involves a site visit. The valuer familiarises themselves with the property by taking measurements and notes on factors such as location, amenities, layout, construction, and condition. The site visit duration depends on the purpose of the valuation and the type of property. For instance, a small one-bedroom flat being valued for a lease extension may take 15 minutes. In contrast, a large six-bedroom detached house in poor repair being valued for Inheritance Tax purposes could easily take over an hour.

Thirdly, almost all residential valuations are undertaken using the comparable method. This means that the valuer assesses the value of the subject property by comparing it to the sale prices of other similar properties in the local area. The valuer needs to review all the available evidence, which can comprise over 100 transactions, and select those considered most relevant, typically 3-6. Using this evidence, the valuer then comes to an opinion of value through analysis and comparison. This process can be complicated, often taking several hours, depending on how similar or dissimilar the comparables are to the property being valued.

Lastly, the valuer needs to write a report detailing the purpose of the valuation, the scope of work and level of investigation undertaken, the evidence relied upon, and how the valuer has arrived at their opinion of value. The RICS and IVSC set minimum requirements for the contents of valuation reports, so beware of reports that seem very short and lacking in detail or those presented in “letter” form.

In conclusion, producing a professional valuation report requires a rigorous process that includes understanding the client’s circumstances, conducting a site visit, analysing comparable evidence, and writing a detailed report that complies with the RICS and IVSC’s minimum requirements. It is crucial to choose a specialist valuer willing to allocate the required time and skill to ensure the accuracy of the valuation.

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