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What is Real Estate Valuation?

What is Real Estate Valuation?

Valuation is the process of developing an opinion of value of an asset, for various purposes including but not limited to Lending/Collateral, Insurance, Accounting/Financial Reporting, Possible Sale/Purchase, Compensation and Compulsory Acquisition, Court Settlement, Bid/Security Bonds etc.

Why is it important to have your property valued?

Most homeowners or landlords whether individuals or corporates know what they paid for their properties and may know how much they receive as monthly rentals.

Question: Do you know the current Market Value of your property? Do you know if the rent you are receiving or paying is the current market rent? Which value or price have you insured against your property?

Why does it matter?

If you are living in your home, intending to continue living there for the foreseeable future then why would you care about its current market, rental or insurance values? The current market value and other values are important for a whole host of reasons, for; insurance purposes, financial planning and of course when selling, downsizing or trading up, equity release.

Insurance Purposes

A lot of homeowners fall into the trap of using the Current market value or their original purchase price when getting a quote for home insurance. This will generally lead to much higher premiums. You should always use the rebuilding or replacement cost (Also known as the Insurance Value) when getting a home insurance quote. What would it cost you to rebuild the property if it was destroyed by a fire etc. Call a valuation surveyor and would give you an insurance value of your property.

Financial planning

It’s good to know the current net worth of an individual or organization before making any major decisions. By knowing the current market value of a property, you can assess if you are in negative equity and if so by how much. This information is extremely important when you are making major life choices or talking to your bank; especially if you are considering downsizing, trading up or upgrading your property.

When selling or Purchasing Property

This is perhaps the most obvious time that you should know the true market value of your property. A property pitched at too high a price will not sell quickly and may ‘go stale’ in the market and an under-priced property will not give you the best return on your investment. At the point of sale not only should you do your own homework as to your property’s value but you should also engage a Registered Valuation Surveyor and get their expert opinion of Value. Property investment is one of the biggest investments an individual or organization make and it involves a lot of money and therefore the need to pay the amount equivalent to the value of that investment. The valuation surveyor should be engaged before a consideration is made to purchase any property to ensure that the amount paid is equivalent to the market value of the property.

 Market Rentals Receivable

If you have rented out your property it is always prudent to know the Rental Value of your property to establish if the rentals that you are receiving or asking are in line with market trends. If you do not know you may be receiving below market rentals or you may be asking way above market rentals and therefore not able to attract credible tenants to your property.

 Who does Valuation in Zambia?

According to CAP 207 of the laws of Zambia, the only person who can engage in the business of Valuation in Zambia, is a Registered Valuation Surveyor registered under the act with a valid practicing licence issued by the Valuation Surveyors Registration Board. It should be noted that it is an offence for any person who is not registered under this act to offer valuation services or engage in the business of valuation.





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