carry out "valuations" that is, they determine the value of
the subject property as at a certain date. A valuation is a report
which states the value of the land according to accepted practice and
theory. It is important to realise that a valuation is much more than
the determination of numbers when determining the market value of the
subject property. In fact, as is shown below, outside environments
such as the consumer (client or taxpayer), the courts and politicians
are much more important in the valuation system than the valuer.
is a common mistake for valuation commentators to think of the valuer
as a "stand alone" person who can determine the value
independently of the outside environment, a discipline centric view.
Rather, the outside environment which is usually beyond the control
of the valuer, determines the nature, the content and method of
valuation. Therefore, a good definition of a valuation is the one
that follows as it recognises the outside environment:
an appraisal is solving a problem. The solution requires
interpretation, in terms of money, of the influences of economic,
sociological, and political forces on a specified real property -
American Institute of Real Estate Appraisers (AIREA), "What to
look for in an appraisal", 1975.
more traditional and less accurate definition is as follows:
act of estimating the value or worth of anything is the duty of the
valuator - Wellan, "Real estate valuation", The Valuer,
October, 1951, 387.
following Institute definition although not recognising the effect of
the outside environment, at least recognises the eclectic nature of
is a method of investigation characterised by insistence on careful
appraisal and measurement. It purports to establish a money value for
land and buildings both urban and rural. There, as a discipline, it
is closely related to economics, to accounting, to surveying, to town
and regional planning, and to real estate practice - Australian
Institute of Valuers (AIV) Handbook, 1976.
steps in the valuation process are as follows:
Public & private
& BEST USE
Physical, legal and
As per inspection #1
add to database,
If comparison is OK
change values if
sales and events
If necessary support
court or tribunal.
To better understand
the effect of the outside environment, valuation should be analyzed
using the systems approach as this puts the valuation into it's proper
context. The valuation environment can be classified a number of ways
for example, by users.
valuation user environments