Details play a central role in a certified real estate valuer’s mission, which requires him to pay attention to details during the research process to determine the real estate’s market value, as it affects many decisions, such as buying, selling, investing, and obtaining loans.

Some mistakes may happen in real estate valuation that affect the estimation of the value and cause serious issues in the movement of the real estate market. In this article, we will talk about some common mistakes in real estate valuation and their impact on the movement of the real estate market.

The impact of mistakes in real estate valuations:

Real estate valuation directly affects the movement of the real estate market as a whole in the Kingdom, as it is the first method of determining the market value, so any mistake made in the work of assessors will result in many of the factors that we will address.

• Estimating an unfair value: If the price of real estate increases above the fair value of the real estate exaggeratedly, this will lead to a decrease in the level of demand and possibly the overall lack of Saudi real estate, and if the price decreases, it will cause financial loss to the seller and loss of confidence in the real estate valuer.
• Real estate mortgage: If the value is overvalued, it may be difficult for the buyer to get a bank loan due to the difference in value. On the other hand, if the estimate is lower than the actual value, the bank may be at risk if the borrower fails to repay the loan.
• Real estate taxes: unfair valuation will lead to overpayment of real estate taxes:
• Impact on Real Estate Investments: Inaccurate valuations can distort real estate investment decisions, whether it’s selling, buying, or renting.
• Impact on financial statements: An incorrect estimate of a real estate value can affect the financial statements of individuals or companies, which can lead to financial issues.

Factors that lead to an inaccurate determination of the fair value

• Experience: To get a professional valuation, seek a valuer experienced in the specific type of real estate you need assessed. A novice valuer might compromise the quality of the valuation. Additionally, ensure the valuer is accredited by the Saudi Authority for Accredited Valuers.

Aain Real Estate Valuation Company can help you with this through its professional and certified team that has extensive experience in the field of real estate valuation.

• Using an unsuitable valuation method: A real estate valuer may rely on an unreliable method to estimate the value of the real estate, or may ignore important factors in the valuation such as the condition of the real estate, its location, the type of real estate, and its comparison with similar ones, which leads to inaccurate results.
• Estimating real estate value with personal judgment: Valuers should assess property value impartially and objectively, avoiding personal opinions. They should use scientific and objective methods to estimate the property’s worth.
• information: The quality of the information affects the estimation of the value as the valuer may miss some important information that directly affects the value, or expand the use of unreliable information.
• Key inputs: They should be correct and consistent with the valuation method.
• Failure to adhere to approved valuation standards.

Tips for a professional report

A professional report stands out because it’s easy for the average reader to understand, even if they’re unfamiliar with real estate valuation. It should present a logical argument, supported by evidence that validates the fair value estimate. Here are the most important elements to include in the report:

• Definition and qualifications of the real estate valuer
• Stating the purpose of the valuation 
• Clarify the specific scope of work. 
• Define the scope of research and investigation
•  State the basis of value (investment, market, or liquidation value). 
• State the assumptions used in the valuation.
•  Identify the nature and sources of information used as evidence of value.

• The report must serve its intended purpose.
•  must conform to the standards adopted for the valuation of real estate.
• The report should maintain consistent wording and avoid mistakes.
• The report should be uploaded on a Qima platform.

We advise you to contract with Aain Real Estate Valuation Company as it is one of the most leading valuation companies in Riyadh and has many branches and can help you get a professional valuation with fair values.

In conclusion, real estate valuation is an essential task that influences and responds to economic shifts in the Kingdom. To avoid serious real estate valuation mistakes, it should be conducted according to the standards set by the Saudi Authority for Accredited Valuers.