VALUATION REPORT

 INTRODUCTION

When a valuer is required to carry out valuation by a client, he will eventually have to sum up all his findings in a “Valuation Report”. This will entail going to inspect the property and taking note of the location and any important landmarks or adjoin proprieties. The valuer will need to take external and internal measurements although the procedure depends on the method being employed for instance, if he is using the comparison method, he will measure the entire premises. The valuer will also investigate the rent passing on, or value of, similar properties in that area. After physical inspection of the subject property and collection of information, the valuer chooses one amongst the various methods of valuation which suits the property most and mathematically resolves it. The final step is to have a report written on the above information gathered.

OBJECTIVES

The objectives of this unit are:

• Examine the relevant data for valuation report 
• Determine the format of valuation report 

Valuation report

Valuation report writing requires professional skill and this is because a lot of issues will need to be addressed in the report. These issues include:

1. Letter of transmittal 
2. Photograph of subject property 
3. Location sketch 
4. Purpose of the valuation 
5. Definition of market value 
6. Legal description of subject property 
7. Statement of highest and best use 
8. Assessment of tax data 
9. Neighborhood data 
10. Site data 
11. Property data 
12.  Floor plan 
13. • Basis of valuation 
14. • Valuation methods 
15. Valuation opinion 
16.  Statement of limiting conditioned 
17. • Certificate of valuation 

SELF ASSESSMENT EXERCISE 1

What are the relevant data that the valuers has to collect in preparing the valuation report.

Format of valuation report

Valuation report consists of the essential outlines under which the report should be prepared. It is important that the outlines follow a logical order, even though there may be variations depending on the purposes for which the report is required, or style adopted by an estate firm. The essential ingredients required in the different parts of the valuation are as follows:

1. Brief/instruction: Reference to the source of instruction which might have come verbally or in writing. In some cases you may need to restate the instruction to reflect the extent of job expected of the valuer by the client. 
2. Date of inspection: This is the actual date on which the inspection was carried out for example, 4th January 2012, where the inspection took some days to accomplish, a range of dates should be given e.g. the shopping complex was inspected between 20th and 23rd December, 2011. 
3. Purpose and scope: The purpose of the valuation should be stated in clear terms whether it is for Insurance or Mortgage. The scope will show the definition of the type of value being determined. It will also reflect the limit covered by the instruction, there may be an electricity generating plant in the premises which is not intended to be included in the valuation. It becomes very important to state it clearly that the generating plant does not form part of the land and building being valued. 
4. Location: Comprehensive address of property and brief description of how it can be located within its neighborhood. Some permanent landmarks can be referred to and location sketch plan can be included in the final valuation report. 
5. Neighborhood character: Explain the type of land use that dominates the area i.e. commercial, residential, Government Reservation Area, etc. Any notable feature that can depict the clear picture of the surrounding should be mentioned. 
6. Site description: Plot, size, shape and physical nature of the plot. Beacon numbers, fencing and gate, precise description of the structure developed on site. 
7. Construction: Sequence description of material, style, and quality of construction from foundation to the roof or vice-versa must be made. 
8. Accommodation: The details and accuracy in presenting room sizes depend on the type of property. The schedule of accommodation provided must however be correctly presented. 
9. Services: Water supply, telephone, and electricity, whether they are tapped from mains. Other facilities provided- water tanks, generating set, well or borehole etc. 
10. State of repairs: Reflect the standard of maintenance- poor or well maintained. Any roof leakage as maybe indicated from the ceiling. Any wall cracks, sign of dampness or partly fallen fence.
11. Planning: Does the development on site conform to what the area is zoned for.
12. Tenancy: State the type of tenants, state whether the property is fully let or partly and also if voids is experienced. It is not compulsory to mention tenant name but where it could improve the image or value of the property one can do so. Range of rent passing can be quoted. Also, express the possibility of improvement or maintenance of current level in the foreseeable future. 
13. Tenure: Type of interest subsisting in the subject property and the registration particulars of the document and also the unexpired term should be stated. 
14. Assumptions: Assumption are commonly stated in the following areas:  The likely effect of planning schemes. Source of information. Market situation. 
15. Valuation opinion: State the value of the property and where there is need for a breakdown, state it clearly. The value should however be stated as at the date of inspection or valuation. 
16. Caveat or Limiting Conditions: This deal with liability to third party as well as the extent to which the report could be used, statement about mode of publication, amendment to the report etc. 
17. Appendices: This relates to additional information and other documents like location map, building plan etc. which need to be attached to the report. 

In writing a report, other things considered to be of paramount importance are: the chronological order, good language, clarity, simplicity, correctness and completeness. In addition, are accuracy, appropriateness, consistency, dignity, directness, accidental deception avoidance, impersonal, objectivity, and restraint on emotion.

SELF ASSESSMENT EXERCISE

Mention the relevant headings in a valuation report.

CONCLUSION

The knowledge acquired in this unit has equipped you in writing a simple report. The more
you practice on writing report the better you become.

SUMMARY

In this unit you have been given guidelines on how to gather information before you write your report. The headings give you a guide on the data required. It is better to get more information than less which will require going back to site at an additional cost and time. You need to go along with writing material and measuring tapes for measurements.