The expression "property valuation" has been used interchangeably with "real estate appraisal".
Valuation of property becomes necessary when an informed opinion about the open market value of real property is required. This necessity is based on the reality that there are no two properties that are exactly the same - they will at the very least differ from themselves in terms of location.
And when you consider the fact that location weighs quite heavily in estimation of property value, the importance of carrying out a valuation exercise for every property becomes obvious.
Below, we discuss two reasons why anyone - including you - may need to understand valuation.
1. So You Can Buy At The Best Bargain Prices
At some point in life, one may decide to buy property - a home to call one's own for instance. Just as for the intending seller, a prospective investor in property will need to find out what the property s/he is considering is worth in the market - currently.
Most people are likely to resort to getting some form of financial support - often in form of a bank loan or mortgage, to facilitate buying the property they want. The lender will - as a rule - request that you provide an appraisal report for the property, prepared by qualified and competent professionals.
That report is what the financial provider you approach will use to ascertain that the property can actually sell for a minimum of the actual loan amount you are requesting. If you do NOT get a valid appraisers' report, it is highly unlikely any institutional lender will seriously entertain your request.
Your lender will require an appraisal when you ask to use a home or other real estate as security for a loan, because it wants to make sure that the property will sell for at least the amount of money it is lending.
2. In Order To Get The Most Amount of Money From Selling
If you own property, there may come a day when you want to sell it. By then, one crucial thing you WILL need to do FIRST, will be to find out how much your property is worth in monetary terms. Without this important piece of information, there is a good chance that you might end up selling without getting a good price for it.
The reason for this is not farfetched. Most people who want to buy anything - car, land or home - naturally want to try and do so as cost-effectively as possible. You would do the same. It is a natural tendency.
Therefore a seller, if not well informed as to the current market value of his/her property, could lose out - particularly if dealing with a buyer who is shrewd/better informed.
One writer stated that "your home is worth exactly what someone is willing to pay for it", adding that this is the reason why your purpose would be to find that person willing to pay highest possible price for it.
He further noted that due to the use of standard computation methods real estate appraisers may tend arrive at a value for the appraised property, below its true market value. You might therefore want to get additional guidance before making use of the information presented to you.
Summary
To find out the current market value of your property, you will need a real estate appraisal or property valuation carried out on it. This process of establishing the property value, helps to estimate the likely sales price it would attract, if it were to be put on sale in the open market.
In many parts of the developed world, finding buyers for your property (or searching for property to buy) by yourself, is something that can be done.
However, for most people, it is advisable that you hire professional s to help - at least with valuation. Agreed, the seller's commission can be a turn off, but sometimes having experts, who know the ins and outs handle a selling process of this magnitude for you, is likely to do more good than ill.
Emmanuel Ibukun Efuntayo - is an accomplished real estate professional, and Principal Consultant of Ibukun Efuntayo & Co., a highly reputable firm of Estate Surveyors and Valuers specialised in providing expert - personalised - Estate Consultancy, Facility Management, Project Management, Property Development and Valuation services to clients.
With more than a decade of post-qualification experience, gained from working in the past, with companies like NNPC and Eko International Bank (now EIB International Bank), Emmanuel leads an efficient team of real estate experts recognised for delivering good quality, prompt and courteous services to clients
Visit http://iecvaluers.com to subscribe to his monthly Estate Survey newsletter - you will receive timely news and information on latest developments in Nigeria's real estate market, as well as reliable alerts on premium properties available FOR SALE or TO LET. Join our growing community on Facebook at http://www.facebook.com/pages/Lagos-Nigeria/Ibukun-Efuntayo-Co-Estate-Surveyors-Valuers/135721559786437
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