Property valuations are provided by registered Professional Valuers, although Estate Agents are also able to provide their opinion of value.

At the end of the day, both professionals provide an opinion as to the market value of a property, although there are factors which one has to consider, as there are differences as to how and why these opinions of value are derived.

Differences between a Professional Valuation and an Estate Agents opinion of value
A valuation done by a Professional Valuer involves a formal process which has a legal standing in court and is an independent opinion of value, whereas an estate agent’s opinion of value is an informal estimation of price and which has no legal standing. Although there are professional Estate Agents, who are very well informed and know the area in which they operate very well, there is a strong possibility that agents may have a vested interest in a property due to the potentiality of receiving commission on a concluded sale. Therefore, agents may provide an opinion of value which is in excess of market value, in order to coax the seller into signing a sole mandate to market the property. Or on the other hand, an agent may convince a seller of a lower value in order to conclude a quick sale. It is therefore evident that a significant difference between the 2 professionals, is being independent compared to having a vested interest.

A Professional Valuer charges a fee for his services, as the valuation document has legal standing which can be utilised for several purposes. A Professional Valuer has to be a member of the South African Council for the Property Valuation Profession (“SACPVP”), and therefore a client has recourse against a Valuer, should it become apparent that their market valuation is incorrect. Further to that, some Valuers are voluntarily covered by professional indemnity insurance, giving clients peace of mind knowing that potential valuation losses, disputes or errors are covered by the policy. There are a few agents who charge a minimal fee for their valuations, but the SACPVP has no bearing in this instance, nor are they covered by professional indemnity insurance for this purpose.

A professional property valuation involves a complex and detailed process, and it can only be provided by a qualified Valuer who has undertaken the necessary education, training and passed the board exam. This provides security that all factors relevant to the particular property are adequately considered. Zoning and building restrictions, servitudes, title deed restrictions, highest and best use, macro and micro economic factors are examples of a few. In most instances, agents are not even aware of these factors which can affect the value of a property tremendously.

Further to the above, Property Valuers also consider the following in their valuation reports:

  • The land extent, the aspect or views afforded by the property and the topography,
  • The size, layout and flow of the building internally,
  • The architectural style of the dwelling,
  • The condition and state of repair of the property,
  • The amount of accommodation,
  • The quality of finishes,
  • Desirability of the suburb,
  • The location of the property in relation to schools, public transport, shops and amenities,
  • Traffic and access,
  • And any other additional extras the property may have.


Why are Property Valuers required?
Property valuations are carried out for various clients including banks, financial planners, attorneys, The South African Revenue Services, listed and private companies or private property owners for a wide range of purposes, which include, but are not limited to:

  • Market value for financial statement, disposal or acquisition purposes
  • Alternative use valuations
  • Developments
  • Market rental determinations for new leases, renewals or rental disputes
  • Estimated new replacement cost (ENRC) or Depreciated replacement value (DRV) for insurance purposes
  • Forced sale values for liquidation purposes
  • Valuation of assets for security purposes (mortgage finance)
  • Releasing of guarantees
  • Divorces
  • Valuations for rating purposes in order to appeal municipal valuations during supplementary valuation rolls
  • Valuations for expropriation purposes
  • Valuation of servitudes
  • Land claims
  • Valuations required to determine values for mergers or take-overs
  • Valuations for division of family or business property assets
  • Arbitration
  • Estate or transfer duty
  • Capital gains tax

Estate Agents are not qualified to provide valuations for the above purposes.


Why are Estate Agents required?
It is the estate agent’s responsibility to market their clients’ properties and achieve the determined market value of the property as a sales price. They need to prepare the property for viewings of such by potential purchasers whom they take to the property, to complete the sale agreement and keep the seller and purchaser informed during the transfer process.

Whilst estate agents are not qualified to provide valuations, Valuers will contact several agents to confirm recent sales and the demand for properties in the area, as they have first-hand experience of such, operating in the area on a daily basis. It is however the Valuers’ responsibility to utilise the information received appropriately and cautiously when finalising values and valuation reports.


Conclusion
Utilise the correct professional for your needs when requiring a property valuation and avoid pricing your property incorrectly as it could cost you hundreds of thousands of Rands if you are advised incorrectly.

If you have opted to utilise the services of a Property Valuer for an independent valuation of your property, please ensure that the Valuer you employ is registered with the South African Council for the Property Valuers Profession (“SACPVP”); either as a Professional or Professional Associated Valuer. Valuers are provided with a registration certificate from the SACPVP, as proof that they are registered and it displays the Valuer’s Name, Member Category, Registration Number, Restrictions and Expiry Date. Also ensure that the Valuer has the necessary experience to conduct the valuation and professional indemnity insurance in place, for your peace of mind.


Feel free to contact us so that we can assist with any valuation requirements you might have. We would like to confirm that all our Valuers are registered with the SACPVP and are able to perform valuations of all property types, with no restrictions. We have vast experience in the valuation field of all properties including, residential, commercial, industrial, agricultural and specialised properties. We consult with a reputable network of professional Estate Agents when conducting our market research, whom further we are able to refer to you should you want to sell your property. We also have Professional Indemnity Insurance Cover underwritten by AC and E PI & Liability Underwriting Managers (Pty) Ltd