valuation and assessment summary

VALUATION & ASSESSMENTS SUMMARY - PROPRO

INTEREST VALUED

This will normally be fee simple with vacant possession. The fee simple indicates the nature of the interest in the property, while the "vacant possession" reflects that the property would transfer with that occupancy status.

Even if an interest in fee simple is held, a property may be subject to a long lease that could prevent vacant possession being available until expiry. In this case a value subject to long term lease is provided, however a vacant possession basis value is also provided.

An interest less than fee simple can be held. If so, the nature of the interest should be stated and its effects explained in the Additional Comments section.

VALUATIONS

The report can include various valuations depending on the type of property and the circumstances:

Existing Property: showing both the land value and the added value of

improvements as components of Market Value. This presentation of figures is suitable for any developed property (but not strata). Further, where a significant extension/ renovation project is involved or significant repairs are required, there is also provision for an 'As if Complete' (see below) valuation to be included immediately below the Existing Property 'Market Value'.

As if Complete: for use with TBE/Proposed Dwellings primarily. “As if Complete” is an assessment which envisages the proposed work as if it is already complete at the date of valuation and reflecting the current market. It does not attempt to anticipate what the market level will be when in fact the proposed work is completed.

For as if complete basis valuations, the lender should request a final inspection by the Valuer to confirm satisfactory completion and to confirm the valuation as at the original report date (this will not normally be an updated valuation unless specifically requested).

Vacant Land: while this report variation shows the land value, it also provides for showing the added value of minor improvements to arrive at market value.

Strata title (unit title) property: for use with residential units. This shows a single figure only as land value is not relevant to strata.

Vacant possession basis value: where more than 6 months of along term lease remains, the valuer should provide the market valuation of the property subject to the lease. In addition a fee simple vacant possession basis 'Market Value' should be included also.

The main valuation in each instance is shown in both words and figures.

The valuations are 'point in time' assessments relevant to the date of valuation (date of inspection). Real estate markets are dynamic and subject to change. However, several of the aspects under the Market Risk Ratings heading ('Reduced Value next 2 3 years.' and 'Market Volatility') should be helpful in indicating the 'sustainability' of the assessed value level.

MARKET VALUE

A single figure amount is recorded for the market value in line with traditional valuation practice. The figure will normally be arrived at after consideration of several valuation approaches such as Sales Comparison (direct comparison) and Summation. The Capitalisation met6hod may be used for investment property that is subject to a long term lease. Immediately above the market value is an apportionment of that value into its main components the value of the land and the added value of the improvements. For strata title (unit title) property a single value only is recorded, as an apportionment is inappropriate.

As an additional security measure, the market value is also provided in words.

The market value assessed by the Valuer relates to the market conditions existing at the date of valuation (which will normally be the date of inspection).

If a typical marketing period in any location appears to be more than three to four months, the Valuer should provide an estimate of the likely marketing period necessary to achieve the assessed market value. In such circumstances, the valuer should also provide a statement of the dynamics of that market in the additional comments section.

Market Value should reflect the level of risk that would be apparent to 'knowledgeable' and 'prudent' parties. It should not include risks that are not market knowledge. It does not attempt to predict the future.

If the valuer is in possession of information that is not market knowledge and it could impact adversely on the property in the foreseeable future, the valuer should provide special comment in 'Addition Comments' provided it is not privileged information.

The valuation does not reflect mortgagee In possession or other forced sale circumstances where the realisable price under certain market conditions is likely to be less than market value. A forced sale value can be provided in the future should such circumstances arise and should then be accompanied by appropriate advice reflecting the then current market conditions and selling circumstances.

See chattels (inclusions)

OTHER ASSESSMENTS

The report could include other assessments depending on the type of property and the circumstances as noted below:

Rental value unfurnished.` This reflects the most probable market rental for the property assessed in the same condition as the property is valued. The rental does not include rent for furniture unless:

a charge is held over the items
the charge is sighted by the valuer
a copy is annexed to the report
the valuer makes specific note of the inclusion of furniture in additional comments.

Replacement insurance: This is an assessment of an insurable sum under replacement and reinstatement conditions. This would normally include:

estimated current construction cost
provision for cost escalation during period of insurance and rebuilding process.
allowances for demolition and clean up
a professional fees.

Cost of alternative rental accommodation is not included. In some instances a lender may require variations to these. Provided any variations are recorded in the standing instructions to the Valuer and the lender's name is recorded on the report, it should not be necessary to specifically note the variation on the report.

Where a TBE, Extension or Renovation is involved, the assessment for Replacement Insurance should ,include the proposed work. No assessment is provided for a strata unit as insurance will normally be the responsibility of the Body Corporate (owners corporation) for the whole development.

“x”' day Sale Value: If a lender specifically requests that a value be assessed reflecting a shorter (or longer) marketing period than the market currently reflects, a further assessment may be provided under 'Other Assessments'. The number of days for the restricted marketing period should be stated. As this valuation would not likely meet the 'after proper marketing' provision of the Market Value definition, it should not be provided in the 'Market Value' position (where it would reflect 'after proper marketing'). See market value above.

Where this value is requested, a copy of the client's written instructions to provide it should be retained on file.