PROPOSED
DEVELOPMENTS
The
valuer is sometimes called upon to determine the value of land
subject to a proposed development for lending purposes. This is
referred to as a "to be erected" (TBE) valuation. It is
usually carried out by reference to the plans and specifications of
the proposed building or additions. If the available data is
inadequate, the valuer should qualify the report as being subject to
the proposal meeting certain minimum standards. Provision can be made
in the mortgage deed for the incorporation of the valuer's
requirements or conditions. For large proposals, the valuer will have
to work in conjunction with other experts such as structural
engineers, builders, architects or quantity surveyors. The valuation
should be subject to satisfactory certirIcates of compliance and
completion from the local council and supervising architect.
The
API Standard (1993) makes the following important comments in
relation to the valuation of a proposed dwelling:
VALUATION
OF DWELLINGS TO BE ERECTED (TBE)
6.1
Valuers may provide, on request from a lender, a valuation of a
proposed dwelling on a completed basis. Instructions from lenders to
value dwellings to be erected should include:
(i)
a copy of the builder's quotation, including the builder's licence
number, contract or tender or, in the case of an owner builder,
a schedule of costs on a trade by trade basis and the owner builder's
licence number;
(ii)
a copy of the set of council approved and stamped plans and
specifications, however, these may be sighted prior to completion if
not available at the time of instruction;
(iii)
engineer's details of the proposed building for concrete slab floors
and other structural elements as applicable.
6.2
Where either, all or some of the plans, specifications, documents,
etc referred to in paragraph 6.1 are not made available to the
Valuer, the Valuer should draw this/these fact(s) to the attention of
the lender and, in certain circumstances, may consider it more
appropriate to decline to express an opinion.
6.3
In undertaking a valuation of a property on which the dwelling is to
be erected, the Valuer should not hold him/herself out as having
qualifications in a building/structural discipline unless he/she does
have such qualifications.
6.4
In the event that a Valuer is not so qualified as referred to in
paragraph 6.3, he/she should recommend and advise the mortgagee that
an assessment of costs or comment on any departures from acceptable
standards of construction and/or relevant Australian construction
standards be provided by another suitably qualified person, eg
engineer, architect, quantity surveyor.
6.5
If the Valuer in the valuation exercise has appropriate costing
expertise and cost records, he/she should carry out a check costing
based on details in the builder's tender, the plan and specification
and advise the mortgagee of any significant difference between the
costing and the builder's tender and any possible reasons therefore.
6.6
The Valuer should assess the on completion market value of the
property as at the date of the valuation report and having regard to
the matters referred to in paragraphs 1.1,1.2,1.3,2.1 and, where
applicable, 4 of these guidelines. The valuation should be, inter
alia, subject to:
(i)
satisfactory completion of the dwelling in accordance with the
matters referred to in paragraphs 6.1 of these guidelines;
(ii)
an inspection by the Valuer following practical completion of
construction;
(iii)
confirmation of the value following inspection after practical
completion;
(iv)
issue of all relevant approvals including a satisfactory building
compliance certificate under the relevant legislation (if
applicable);
(v)
sighting of any other reports from other experts who have provided
advice in respect of the construction of the dwelling;
(vi)
such other matters/issues that the Valuer is of the opinion should be
drawn to the attention of the lender.