KNOWLEDGE BANK FROM B KANAGA SABAPATHY
LET KNOWLEDGE SPREAD
Message from B K Aruna-21/09/2024
D/o, B Kanagasabapathy
Question from a fellow valuer:
I recently came across the term “4-Way Test” in one of your articles. Could you explain what it means?
Opinion :
How does a bank valuer practically verify the market value they’ve determined after carefully applying valuation principles and procedures?
By asking themselves the following questions and answering them with objectivity, sincerity, and an unbiased mindset:
1. With the hard earned money I have, will I purchase this property for the value I am certifying?
2. What will I do with this property if I purchase?
3. What returns could I reasonably expect if I buy this property?
4. If I want to sell this property tomorrow, will I get the value I’m currently certifying?
If the valuer can confidently answer “YES” to all of these questions, they can proceed to sign their report with assurance.
However, if any of these answers is a resounding “NO,” it signals the need to review the valuation critically. The valuer should carefully reconsider the reasoning that led to this doubt and adjust the value downward if necessary, until they can answer “YES” wholeheartedly to all the questions.
Under no circumstances should the valuer increase the value based on this reflection. Importantly, a bank valuer is not a predictor of future trends but a practitioner of present realities—operating in the “today and now,” without speculating on the future.
With best wishes,
B. KANAGA SABAPATHY
[email protected]
www.bkanagasabapathy.com
About the Author:-
- Mr. B. Kanaga Sabapathy born in 1951, is a Civil Engineer who belongs to the 1972 batch of Regional Engineering College, Tiruchirappalli in Tamilnadu.
- He is a Registered valuer of the Central Board of Direct Taxes, a Professional Engineer and also a Chartered engineer. Valuation is his main profession..
- He was the National Vice-President of the Institution of Valuers (India) for 11 terms.
- He is a regular contributor of articles in the Indian Valuer Journal from the year 1985. His articles especially his regular column “Questions & Opinions” are very popular among the practising valuers in India.
- His book “Guidelines on Valuation for Banks” (2002) is used to be referred by many banks. The valuation formats designed by him were accepted and adopted as the formats by many banks in the country.
- His son K. Arun and daughter B.K. Aruna are also approved valuers and they also contribute articles to the Indian valuer journal.
- His guru: Mr. C.H. Gopinatha Rao, Chennai.
- His mentor: Mr. R.K. Gandhi, Mumbai.
- His role model: Mr. S. Rajaratnam, Chennai.
- His best students: Thousands of valuers in the country
