Valuation
What Is Your Property Really Worth? Understanding the Role of Professional Valuation
The price someone is asking for a property is not necessarily its market value. Professional valuation provides an informed basis for understanding what a property may be worth within a particular market and for a particular purpose.
“How much is this property worth?”
At first glance, the answer may appear straightforward.
A property has an asking price. Similar properties have been advertised at certain prices. Someone recently bought a property nearby.
But property valuation is more than comparing figures.
A professional valuation considers the property, its circumstances, the relevant market evidence and the purpose for which the valuation is required.
Asking price is not necessarily market value
An asking price represents what a seller hopes to achieve.
It does not automatically represent what the property is worth in the market.
Likewise, a buyer's budget represents what the buyer can or wants to pay. It does not necessarily establish the property's value.
This distinction becomes particularly important when substantial sums are involved.
A sound property decision should be based on more than an attractive advertisement or an informal opinion.
Why valuation matters
Different property decisions can require a proper understanding of value.
Valuation may be relevant when considering:
- acquisition or disposal of property;
- financing and lending decisions;
- investment decisions;
- property development;
- portfolio review;
- asset management;
- taxation or accounting requirements where applicable;
- insurance or other professional purposes; and
- strategic decisions concerning property assets.
The precise purpose of the valuation matters because the appropriate approach and considerations may differ.
Valuation is evidence-based
Professional valuation is not simply a matter of looking at a property and choosing a number.
The valuer considers relevant information and applies appropriate professional judgement and methodology.
Depending on the property and assignment, this may involve examining comparable transactions, the property's physical characteristics, location, permitted or appropriate use, income potential, market conditions and other relevant factors.
The result is an informed professional opinion rather than a guess.
Value can change
A valuation is also a statement about value in a particular context and at a particular time.
Markets change.
Economic conditions change.
Neighborhoods develop.
Demand shifts.
A property that was highly sought after several years ago may face a different market today. Conversely, an area experiencing new infrastructure and development may present opportunities that were not previously apparent.
This is why property owners and investors should avoid assuming that an old figure automatically represents today's position.
Professional valuation supports better decisions
The purpose of valuation is ultimately not the number itself.
The number is useful because it supports a decision.
Should the property be acquired?
Should it be sold?
Is the proposed price reasonable?
Should additional investment be made?
How does the property fit into a wider portfolio?
What options are available?
Better information can lead to better decisions.
Understanding value is part of building value
The more clearly an owner understands an asset, the better positioned that owner is to make informed decisions about it.
Professional valuation therefore forms an important part of the wider property lifecycle.
It helps establish a clearer picture of where an asset stands today, while providing information that can support decisions about what comes next.
VAA Perspective
At Victor Adegunloye & Associates, valuation is not viewed simply as placing a figure on a property.
It is part of helping clients understand their assets and make informed decisions about them.
Because before value can be built, managed or sustained, it must first be properly understood.