Valuations

Leading Valuation Services across the Ribble Valley

What does a Valuation Involve?

So, You have enquired about commissioning a valuation. Perhaps you have been asked to do so by your bank, insurers, accountants, or perhaps you are involved in matters as one executor or in legal proceedings. It is very common and not to be unexpected that those seeking ‘Valuation Services’ often have little, if any, idea of the background to Valuation and the requirements placed upon Valuers.

Often clients hold the expectation that the ‘Valuation’ will be little more than a guess, and that Valuers are capable of instantly providing reliable figures. There is an expectation that the Valuer will produce sensible and realistic figures without any systematic and disciplined review of the property in question.

Valuers Should be Registered with The Royal Institute of Chartered Surveyors

Valuation in the UK is controlled by The Royal Institution of Chartered Surveyors [RICS] who require that all Valuers work to the same recognised standards. These standards are commonly called ‘The Red Book’ and are set and updated by the RICS after consultation with the Banking Industry, as well as legal and accounting bodies.

Not every ‘Valuation’ must follow the explicit requirements of the Red Book but there is a requirement upon all Valuers that the spirit of the Red Book be incorporated into all valuation work. The RICS enforces the requirements through its own audit procedures, and the requirements of Professional Indemnity Insurers, the usages of the courts and the Financial Services Authority all further strengthen the code.

This system remains the same for valuations which amount to millions of pounds as it does to valuations of much more modest amount. The intention is to enforce a standard or quality upon the way that Valuations are conducted. The codes cannot itself ensure that the Valuation is accurate, but it can ensure that the methodology and process are of a professional standard.

Clients must understand that Valuers have an obligation to set out the details of the proposed instructions for the agreed Valuation.  This must be done in writing and be jointly agreed prior to the work commencing. Failure to provide clear instruction simply delays any activity. Frequently our clients have been told by other professionals to get a ‘Valuation’ without the necessary attendant explanation of why and upon what basis.

In such cases you should seek a written explanation of your requirements from your accountant or solicitor, for until the instructions are properly understood and written down, we are unable to give the matter consideration.

What Does a Valuer Need to Be Made Aware Of?

You may not appreciate the process of Valuation and consequently the basis of our charges. Whilst the Valuation of property can never be an exactitude, the professional Valuer has been educated to produce figures that are accurate. Valuation methodology generally focuses upon the state of the market as evidenced by property transactions.

In order to do this, Valuers measure buildings and land to ascertain their full extent. Records both present and past require relocation and consideration. To this basis the Valuer may then be required to have knowledge of, and consider diverse factors, only some of the more common being set out below:

• Planning gain or potential
• Planning or legal restriction
• Possible changes of use
• Taxation issues
• Requirements for repair or improvement
• Fashions and neighbourhoods
• Effects of lotting
• Shared facilities or access
• Rental values
• Leasehold and Landlord and Tenant issues
• Grants, Subsidies and public funding
• Actual occupation/leases/tenancies etc.,

Only the Valuer can decide what is or what is not significant to the Valuation, and how much time or effort is appropriate in the exploration of each factor.  Because the process is subjective it requires consideration and digestion of all this detail before the Valuer may feel confident in the figure about to be certified.

You will now realise why professional Valuers do not appreciate late instruction and will not normally undertake ‘drive past valuations’, give guesstimates, or work to client proposed figures. Valuers always require an accurate plan and definition of the property before instructions can be given or accepted. If your needs are particularly time sensitive, this needs to be made clear and agreed at the initial discussion.

In difficult or complicated valuation it may not be possible for us to be content with our process in your timescale. If that appears to be likely, we would prefer to decline instruction rather than produce ill considered certifications.

Hopefully this background has given you a brief appreciation of Valuation and the due process required. We hope that you will contact us with your instructions in outline, and that we can help to put those instructions into a sensible agreement between us. We will then do our best to provide you with the quality of ‘Valuation’ that we [and the RICS] are expected to deliver.

For more information, call us on 01200 425697 and we’ll be happy to help you