The art of property valuation!

There will always be a need to find the value of a property irrespective of the economic climate.  In recessional times businesses, individuals or financial lenders will want to know in advance the answers to any ‘what if’s’ and conversely during the boom time they are keen to know if and how much their asset has appreciated should they need to leverage against this or realise its value.

The fact of the matter is that whilst valuation requires a methodical and analytical approach to assess the market conditions and historical transactional data there is not necessarily a magic formula for determining the value of an asset, as more often than not, this value is based on a valuer’s opinion.

Clearly, the opinion of the valuer is drawn from their academic teachings and more importantly their knowledge and experience of the market which is supported by evidence. However, opinions differ as the value perceived from one person to the next may be poles apart.

What is Market Value?

Market Value is defined by the RICS as ‘The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion’.  Therefore when undertaking formal Red Book valuation Surveyors have to work on this basis.

How can the same property have a range of different valuations?

 Valuation of commercial property is an art not a science!  Any surveyor providing valuation advice should have detailed knowledge and experience of the market the property is in along with details of similar transactions in order to help them arrive at a value.  However, various things can affect the value of the property.  For example, a property that is let on a long lease at the market rent to a very strong covenant will undoubtedly have a different investment value to the same property if it were let to a weaker covenant on a shorter lease, this is because investors will value the security of the longer term agreement to a stronger tenant and will ultimately pay more for this due to the shortened ‘risk’.  However, the same property may also have a different value when considering a vacant possession value to both figures.

Can any Surveyor provide property valuations?

 For the purposes of agency jobs (ie putting a property on the market for sale or to let) then any Surveyor can provide an appraisal, albeit this is often described as a valuation.  However, if the valuation is for formal reporting such as secured lending purposes etc then this will be classed as a Red Book valuation which must be provided by an RICS Registered Valuer.

How can BB&J Commercial help you?

At BB&J Commercial we currently have a team of surveyors, including three RICS Registered Valuer’s, who are able to provide both commercial and residential property valuations for various purposes including:

  • Secured lending purposes (we are on the majority of all ‘high street’ Bank panels as well as more specialist lenders).
  • Pension fund purposes
  • Financial reporting
  • Probate
  • Matrimonial
  • Re-instatement (insurance)
  • Section 18
  • Dispute resolution
  • Acquisitions
  • Disposals
  • Notional rents and partnership
  • Taxation

For any further advice or to discuss your valuation needs then please contact BB&J Commercial on 01332 292825 or commercial@bbandj.co.uk