The Property Valuation Process in NSW

Market Value Definition

Market Value is defined by the International Valuation Standards Committee (IVSC) as:

“the estimated amount for which an asset or liability should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.”

Valuation Process

·       Written instructions issued which identify the property to be valued, the interest to be valued, the purpose for which the valuation is being prepared and the date of valuation

·       Physical inspection of the subject property

·       Investigation into the asset’s physical and legal attributes

·       Review of relevant town planning controls applicable to the subject property

·       Review of all available information and documentation relating to the subject property, including title and lease information, building plans, development approvals etc.

·       Research and analyse recent comparable sales and / or leasing transactions

·       Sales or leases of properties should be identified as being comparable, inferior or superior to the subject property

·       Where possible, inspection of comparable sale properties relied on as sales or leasing evidence should be inspected

·       Review relevant town planning controls applicable to the comparable sales / leases

·       Review all available information and documentation relating to the comparable sales / leases

·       Review and consider applicable macro and micro market conditions

·       Assess the appropriate method of valuation reflecting the highest & best use of the subject property (unless specifically instructed in writing to assess a basis of value other than market value)

·       In most cases the Direct Comparison Method of Valuation will be used as the primary method of valuation

·       The subject property is compared with each comparable sale property, with regard to all relevant factors and information available to determine the market value of the subject property

·       preparation of a written report addressing the above and providing a clear explanation of the valuation rationale

·       The valuation is expressed as a single figure

·       A valuation range may also be provided by the valuer although this is unsuitable for certain purposes such as stamp duty or Capital Gains Tax

·       The content of a valuation report will depend on the property being valued, the purpose of the valuation, the instructions of the instructing party, relevant legal requirements etc.

Copyright Aspect Valuation Services 2020