Real estate valuation is the map that guides the investor. What if that map has some mistakes? What are the consequences of those mistakes in the real estate market? There are some mistakes that a real estate valuer makes during his valuation, which of course has a great impact when selling and buying and for any purpose that requires a real estate valuation report.
we will explain some common mistakes that a real estate valuer may make during the valuation:
Top Mistakes in valuation factors:
Real estate valuation depends on several factors that affect the market value, so if there is an input data error and inaccurate information such as real estate specifications or the real estate valuer depends on non-updated market data or does not pay attention to some factors in the property such as regular maintenance and construction quality,
all of this may affect the valuation and lead to wrong results in the real estate valuation report.
Valuation Methods:
There are cost, comparative, and income methods of real estate valuation, so it is important to choose the right method for each type of real estate, for example, it is not correct to use the income method for a residential property, as this will lead to an inaccurate real estate valuation.
Valuation bias:
When a real estate valuer is influenced by external or personal factors that affect the assessment of a real estate valuation, such as a desire to close a deal quickly without thoroughly checking the data, inputs, or economic conditions, resulting in valuation bias.
Ignoring market conditions:
The real estate market changes and this affects the valuation, especially as prices are affected by factors such as offer and demand, economic conditions, and governmental political changes, if the real estate valuer ignores these factors, he may be mistaken in the valuation, and lead to an inaccurate real estate valuation report.
Special features:
Each property has special features such as construction quality, availability of facilities, and the surroundings that include special area services such as hospitals and government offices, so when the valuer ignores these features, he may fail to provide a fair valuation, so he must study all these features accurately to present the real value of the real estate.
Wrong analysis:
Even with the right data, the valuer may make mistakes in analyzing and interpreting it, and this affects the final valuation.
Mistakes in the valuation report:
There are specific requirements and standards for writing a real estate valuation report, as mentioned in Article (28/16) Clause of the Executive Regulations of the Accredited Valuers System issued by Ministerial Resolution No. 107 issued on 28/1/1445 AH
stipulating that an accredited valuer who holds a license to practice the profession must comply with the minimum requirements for submitting the valuation report form and the contract for valuation services as prepared by the standards of the General Authority for Saudi Valuers, so the real estate valuer may make some mistakes that affect the accuracy of the real estate valuation report.
Real estate development:
There may be future improvements planned for the area, such as infrastructure projects or commercial developments, which significantly affect the value, so these improvements must be taken into account to give a fair assessment
This is one of the most common mistakes in the real estate valuation report and it directly affects value or the market in general, so the valuer must adhere to the standards during the valuation.
How to avoid valuation mistakes?
A valuer must avoid making these mistakes to reach the highest level of efficiency by:
- updating data:
A valuer must be aware of all data, methods, and follow-up market and is not only limited to the information received from the client but must check it himself.
- Following the methods:
There are a lot of methods according to the standards, so the real estate valuer must follow these methods to get an accurate assessment
- Analysis:
It is important to study all the specifications of the real estate, the market, and the surrounding environment and analyze them accurately to give the best valuation
- Objectivity:
The real estate valuer must stay away from personal bias and make an assessment based on the accurate data he has obtained.
- Use of technology:
Technology is developing every day, especially in the real estate market, so the valuer must use and use modern tools and techniques to analyze the data and provide accurate estimates
- Training:
It is essential for real estate valuers to train, develop, and personally qualify to keep up with the advancements in the real estate market to ensure they have the best skills and data needed to get an accurate valuation.
Common mistakes affect real estate valuation, so a valuer must follow standards, continuous training, and always look for the right data to reach a correct valuation.
Real estate valuation mistakes are a great challenge as they carry serious consequences for all and the real estate market, so they can be avoided by following some precautions.
if you need an accredited real estate valuer, do not hesitate to contact Aain Real Estate Valuation Company, which has the experience and covers all parts of the Kingdom and is accredited by the Saudi Authority for Accredited Valuers and the Royal Institute of Chartered Surveyors, contact us and get an accurate valuation.
FAQs:
- How to get a good valuation?
First, choose a certified valuer with experience in real estate valuation, and give him all possible information about the real estate, and the valuer must make a visit to the real estate site, and evaluate it according to the approved standards and methods.
- What happens if valuation is higher than offer?
There can be differences between the real market value of the property and the real price paid, depending on several factors such as agreements between the buyer and seller.
- What is the role of a valuer?
The main job descriptions of a valuer include:
- Advising clients on the value of real estate, determining the condition and quality of the property
- Determining the value of the real estate, examining the depreciation of assets, replacement costs, and the value of similar real estate
- Surveying real estate to determine condition, space, construction, and technical design
- Review zoning bylaws and building codes to determine impacts on assessed real property
- Studying and comparing real estate and applying suitable units of comparison such as property location, condition, specifications, and market conditions.