•The
primary concern of the valuer is to estimate the market value,
not to determine the market value.
A valuer is required to value property,
which is to find a market value when the market transaction for the property
has yet to take place.
•The
services of valuer may be sought by anyone with an
interest in, or contemplating a transaction involving land and buildings.
•Value
is not intrinsic but result from estimates, made subjectively by able and
willing purchasers, of benefit or
satisfaction, of the benefit or satisfaction
they will derive from ownership of the
interest.
•The
valuation bases are agreed with the client prior to valuation and should be
appropriate to the client’s need but cannot override statutory definitions.
•Special
knowledge of laws relating to property, knowledge
of property market and knowledge of
special characteristic of a property make the services of a valuer desirable.
•There
are three prime reasons
–Imperfection
of the property market
–The
heterogeneity of landed property and the interest which can exist therein.
–Legal
factors
What
is Property Market?
The
arrangement by which buyers and sellers of properties are brought together to
fix a price at which the particular property can be exchanged.
•
Thus,
it is simply an omnibus terms covering all transactions in the properties.
The
Nature of Property Market
•Local
in character due to fixity of location
•Transaction
are private in nature
•Commodity
is not standardised
•Unorganised
and lacks of central controls
•Absence
of short selling
•Poor
adjustment of market supply & demand
Characteristics
of Property Market
•Prices
are
relatively high
•Government
regulations govern the ownership and transfer become further restriction on the
sale and purchase
•No
central market for properties
•Market
of imperfect knowledge
•Inelastic
supply and demand
Characteristics
of Property Market – con’t
•heterogeneous
– each of a property is unique
•multi-commodity
market
•multi-competitor
•segmented
by certain criteria such as type of
properties, geographic areas, demographic characteristics
and etc.
What
is Property Valuation?
•A
means of providing an assessment of a capital value of, or the income arising
from a property investment.
•
•The
provision of a written estimate as to the price or value of the subject
property on any given basis.
Value
•an
economics
concepts refer to price most likely to be concluded/ to be paid by the buyers
and sellers of a property that is available for purchase.
•not
a fact, not fixed and rarely stays the same for a lengthy
time
•an
estimate of the likely price to be paid for a property at a specified point in
time in accordance with a particular
definition of value
•reflects
a market’s view of the benefits that accrue to the property owner as of the
effective date of valuation
PRICE
•a
concept
that relates to the exchange of a commodity, good, or service [property].
•In
generic term, the amount requested, offered or paid for a property
•is
the monetary figure that someone paid to purchase a property
•may
not necessarily be its value in the market
•however,
it is generally an indication of a value place upon the property by a
particular buyer and/or
seller
under particular circumstances.
COST
•production-related
concept
•refers
to the amount of money required to create or produce a commodity [property]
•use
to quantify expenditure and an absolute fixed figure of the actual expenses
•a
historical fact when the construction of the property completed.
•price
paid for a property becomes cos to the buyer.
What are the differences between
Value, Price and Costs?
MARKET VALUE
•theoretically,
Market value
is “the true underlying value”.
•basically
the value assigned to a property relative to what it can be sold for.
•does
not necessarily reflect the true value of a property, only what it could
reasonably be sold for.
•not
dependent on an actual transaction taking place on the date of valuation.
•a
price negotiated in an open and competitive market, where the participant act
freely.
•reflects
the property’s highest and best use.
•refers
to cash or cash equivalent price.
•significance
in providing information necessary in determining an object or property's value
on the open market, assuming that both buyer and seller agree to a sale, but are under no obligation to make that sale.
•can
be increased by engaging in activity that causes the property or the service to
be seen as having more value in the market place
MARKET
VALUE
[Malaysian
Valuation Standards 5th Edition 2015]
•
The estimated amount for which an
asset or liability should exchange on
the valuation date between a willing buyer and a willing seller in an arm’s-length transaction after
proper marketing where
the parties had each acted knowledgeably, prudently and without compulsion
