By the Book: What is property valuation?
PHUKET: Valuation is a process of estimation of the most probable price that would be paid for a property under typical market conditions applicable at the date of valuation.
The value of a property is the present value of all future benefits expected to be obtained from possession of the property.
The ability to provide a professional and accurate valuation relies on a combination of the professionalism of the valuation consultants and the quality of available market information.
SRE (Siam Real Estate) service uses the market approach, which examines the title, state, age and condition of the property, as well as major selling features. We then compare these with similar properties in the area, taking into account current market factors and the immediate local environment to arrive at a fair market price in the present market.
The valuation process does not review due diligence; either right of property, or access rights or title ownership. Public utilities and services are also not considered.
Due diligence should be carried out by a lawyer.
SRE specializes in appraisal and valuation reports covering: residential properties, houses/villas, town-houses, shop houses, condominium housing development projects, and apartments – also making direct comparisons with similar land plots.
The purposes of the valuation cover the following:
– Current market value
– Asset financing
– Rental assessment
– Mortgage finance
– Security value
– Divorce proceedings
– Dispute resolutions
– Risk analysis
– Insurance cover
– Fire sale estimate
Homes are valued based on what an average person would be willing to pay for a similar property. This data is derived by looking at current sales in Phuket.
Every attempt is made to use sales that have the same characteristics as the property being valued (subject property). These include, but are not limited to, area, number of bedrooms and baths, whether it has a garage and other similar factors.
If a subject property doesn’t have enough matching sales, comparisons are made with properties most closely resembling that one, while making suitable adjustments to create an equitable value.
An example of this would be if the sale property had a swimming pool and the subject didn’t, the sale price would be adjusted to reflect not having a pool.
A sale at fair market value is defined as the amount of money a well-informed buyer would pay, and a well-informed seller would accept, for property that has been on the open market for a reasonable amount of time, assuming neither buyer nor seller is acting under pressure.
When a sale is deemed valid, it can be used to help determine fair market value for other similar properties.
The goal is to value all properties fairly and equally, while being as close to fair market value as possible.
For more information, contact Kevin Hodges, the North Branch and Investments Manager for Siam Real Estate (SRE) in Phuket and author of SRE’s Phuket Residential Market Research Report. He has more than six years’ experience in Phuket’s real estate market.
Tel: 076-324042. Email: kevin@siamrealestate.com; www.siamrealestate.com
— Kevin Hodges
