CHARTERED SURVEYOR APPROVED Having conducted circa 300 valuations in the past two years as an RICS Registered Valuer, Harriet Hatcher, Associate Director, Eddisons Lincoln, is well placed to know that while professional advice does cost, it does add value. Here, she outlines how good advice will always prove its worth.
When professional property surveyors talk about ‘a valuation’, we don’t mean ‘a market appraisal’.
We mean a Red Book Valuation and it will be conducted by a qualified, accredited and certified valuer who has had years of study, professional experience and practice before being awarded the title of an RICS Registered Valuer by the Royal Institution of Chartered Surveyors.
A market appraisal is not a valuation. An appraisal points to price more than value. A formal valuation is much more than an estimate of a price based on some working knowledge of a local property market at any one time and in any one location.
But a formal valuation is a considered opinion of an expert surveying practitioner which is evidence-based on market data and market experience combined with a detailed building inspection.
A market appraisal does have its place, but some commercial property owners can rely on it too much and, in neglecting to have a proper valuation, they can come unstuck.
In the commercial world, formal valuations are required in a number of common circumstances.
For instance, lenders will require a valuation in considering mortgage applications – and when it comes to lending on commercial properties, the amount can be considerable.
In the letting of property, a formal valuation can reassure a prospective tenant or inform an incumbent tenant at the time of a lease review or renewal. In such instances, both parties – landlord & tenant – can benefit from the input of a registered valuer in making the case for either side in negotiations.
As an asset, the valuation of property or a number of properties in a company’s portfolio informs the company’s balance sheet in making property and non-property specific financial decisions or reporting to shareholders.
Valuations play a significant part in matters of compulsory purchase of property by statutory authorities or in probate connected with wills and inheritance affairs.
A less obvious, but very important, function of a formal valuation is for insurance when it comes to buildings & property. A chartered surveyor might discover instances of under insuring or over insuring.
Crucially, a registered valuer can give a reinstatement valuation. Similar to ‘like for like’ when it comes to domestic insurance policies, for a business to be in possession of a valuation for reinstatement in the event of having to make a claim can prove invaluable.
However, too often property owners only come to appreciate the value of a formal valuation when they find they could have benefited from having one on hand.
In any situation where property is an asset, it is advisable to have a regular formal valuation conducted by a professionally qualified and registered valuer as the surveyor.
While a hangover from the pre-digital age, the RICS ‘Red Book’ of standards is a marker of the professionalism, accomplishment and diligence of the individual surveyor and how they practice.
There is little to be gained by knowing the price of everything but the value of nothing, particularly in matters of property.
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