"4 KEY ROLES OF REAL ESTATE VALUER"

“4 KEY ROLES OF REAL ESTATE VALUER”

AUTHOR: ER. HIMANSHU SHRIVASTAVA

As the name states, Valuer is primarily concerned towards the most accurate valuation of the target property creating a feasible bridge for buyers and financial institutions to have a better understanding of the target property on different parameters such as geolocation, type of property, history of the property and future growth as per the current market trends.

From the prospect of Financial Institutes

Financial institutions always need a reliable source to extract the right value for the target property in order to cater their clients and have a long-term relationship. Here the valuers play a vital role acting considering the key factors listed below-

Property Identification

As India is now the most populated country in the world and holds different terrain. The identification of the land, which is a portion of the earth’s surface that is owned by the government, a landowner, or a tenant, is of utmost importance because it is a critical stage of land inspection. There are several different sorts of lands, including undeveloped, landlocked, common passage, and bustee property. In order to assess such assets, a regular process must be used to determine the worth of the property, but before that can happen, it is crucial to identify the land because doing so helps prevent fraud. Here the key role of the valuer comes in to identify the type of property, size, legality, and right sources evaluate the right target value of the property. The key points which are included in property identification are type of land, floor space index and type of zoning.

Market Value

When an asset is placed up for sale in a free market with plenty of competition, its fair market value, or FMV, is often the price. When specific requirements are met, an accurate asset appraisal is depicted by the fair market value. Everything that has a market worth can be bought, sold, or bartered. The price a buyer is willing to pay for a house when you sell it will establish its fair market worth. The Income-tax Act of 1961 states that the FMV of a property must be greater of the cost of acquisition or the price it would typically sell for if offered for sale on the open market. Lack of a universally applicable formula poses the main obstacle to determining market value. There isn’t a single, universal answer to this problem. The fair market value of an item depends on numerous aspects, thus it can only be as accurate as the appraiser’s knowledge and the facts at hand. As an illustration, it can be challenging to estimate the market worth of handmade goods and works of art because they are typically unique and have scant or no comparables. The fair market value of any asset is ultimately more of an estimate than a precise calculation.

Appreciation and Depreciation of Value

The points which affect the value of target property are listed below-

Location and Amenities
Infrastructure
Commercial Real Estate
Disposable income and availability of land
Demand and Supply
Type of Structure
Boundary Condition
Understanding the Nearby Land hold

From the prospect of Buyer

A buyer can learn about a property’s real value and determine if the seller’s or stated owner’s asking price is fair by doing a property appraisal. In some instances, landlords defend high rents by pointing to things like superior construction or extra amenities. Some apartment developers impose excessive extra fees or charge high per-square-foot prices in comparison to the area’s market price, then charge exorbitant prices for the flats. Before signing the contract, a buyer should have a property valuation performed to prevent paying more or becoming a victim of construction fraud or malpractice.

From the prospect of Insurance

Purchasing a house is still a dream for many Indian buyers who are generally concerned about its security in form of insurance and Property valuation is required to ensure that the insurance value can cover any potential losses that may result from any hazards or accidents. The insurance cost will be affordable and the buyer won’t be at risk of having insufficient insurance thanks to an accurate property appraisal.

From the prospect of Tenant

A home, apartment, or retail space to rent out is a common real estate buyer’s goal. The goal of such an investment is to create a steady source of income. An appraisal of the property aids in determining the market price, which the buyer can expect to spend 6% to 10% of the total computed value in rent each month. In addition, appraisal assesses the property’s viability in terms of its rental potential and provides information on the going rental rate in the neighbourhood.

Closure

It won’t be wrong in saying that a valuer holds a big responsibility on their shoulders to assist financial institutions and buyers in providing them with the right value and final report of the target property. This process greatly aids purchasers and financial institutions in making decisions and determining the profitability of an investment. So, the value and advantages of property assessment to buyers and financial institutions are enormous.

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