Ten points to be remembered for valuation for primary securities

KNOWLEDGE BANK

LET KNOWLEDGE SPREAD

Message from B K Aruna 07.09.2023

Ten points to be remembered by a panel valuer when he wants to do valuation for primary securities :

1. Value varies with purpose. The purpose of valuation of primary securities (in most of the times) is to certify the cost.

2. Primary security is the asset created from the bank’s finance. For primary securities, the scope of valuation is to do vetting of the estimate, certify stage cost and issue completion certificate along with the final cost. For the purpose of purchasing a ready-built property, the cost to be incurred by the proposed purchaser is to be certified.

3. Approved drawing is very significant while doing valuation for primary security. Analysing the possibility of demolition threats is very important.

4. Change in specifications, alterations in the interior arrangements, marginal variation in Floor Space Index and plot coverage can be considered as minor violations which may not have any serious impact while certifying the cost.

5. Considerable increase in FSI, non – adherence of plot coverage, construction of additional floors, change of use of the building with reference to the approved drawing are considered as major violations which may have serious impact while certifying the cost.

6. If it is a plot in the newly formed layout, verification of identification is more important.

7. In the case of apartments, verifying the location of the floor, location of the flat on the said floor and ascertaining the genuineness of composite rate are the main duties. Mention six boundaries of the flat. (This is the latest concept).

8. If the actual area and number of floors are more than the approved drawing and if there is a direction from the bank to certify the cost as per the estimate vetted already, certify the value as per the bank’s directions but never forget to record the actuals also.

9. Make it a point that the property is inspected physically every time whenever a valuation report is requested.

10. Never do under-valuation nor do over-valuation in order to favour the borrowers. It will be considered as collusion.