Today we will talk about the most important real estate valuation terms that will help you understand real estate if you are a specialist or you are interested in investing in real estate or interested in real estate valuation in general and what includes it so that you are familiar with the field; as we know that a person cannot master his field without understanding the subtleties that lie in the terms of any work and from here we came to help you with that:

Real estate Valuation Terminology 

• Saudi Authority of Accredited Valuers: It is the authority competent to legislate laws, rules, and regulations for real estate valuation, just as every organization has its regulator, this is the real estate valuation authority.
• Experience hours: The hours gained through your practice of real estate valuation and this is a general word for what you gain from any skill.
• Accredited Valuer: This is reminiscent of an accredited trainer, however, each one of them is in their field, and the valuer is authorized to practice valuation just as a trainer is authorized to train in his/her specialty.

Terms that include value 

Now we come to the terms involved in what is called ‘value’ in the real estate market. Firstly, let’s define the concept of value:

• Value: An economic concept that symbolizes the price communicated by the buyer and seller, regardless of the type of service.
• Book value: The price at which the real estate is recorded in the company’s books or statement of financial position.
• Rental value: What is agreed upon in the written contract is the value of the payment that the tenant is required to pay.

 Now let’s move on to other concepts apart from the word value.

Terminology of obsolescence in the real estate market

Obsolescence: Have you ever heard of the word obsolescence? Yes, this is where the word is also derived for real estate because the building or item being offered is characterized by its obsolescence.

 is characterized by obsolescence, it is replaced by the newness of the thing, technologically or culturally, as a result of which the value of the offer decreases.

Similarly, economic obsolescence refers to the change in the conditions of the economy, positively or negatively, resulting in changes in the value of the items sold.

Purposes of real estate valuation 

• legal purposes: It is valued for a government entity that wants to expropriate property from a real estate entity, or wants to estimate the amount of Value Added Tax (VAT) on a sale when local taxes are levied.
• Accounting purposes: Valued for budgeting purposes in companies that publish accounts annually.
• Buying and selling purposes: It is to assess the expected price of the property in the event of a sale and purchase.

Assets in real estate 

Now let’s move on to the concept of assets in real estate and its branches:

Current assets: 

A short-term asset in the sense that it is used at a certain time for a specific purpose and is not expected to continue in the activity of the business, such as stocks, securities, etc.

 Non-current asset:

 it consists of a tangible or intangible asset, the important thing is its stability and permanence, it may now come to mind what we mean by intangible assets and we answer you that it is an asset that belongs to the company, but its physical entity is absent in its materiality and exists in its effectiveness and by example, the article is clear, such as goodwill, patents, trademarks, and others.

Let’s talk about the last asset in this article, which is the operational fixed asset and we mean what continues and is a permanent basis on which the company builds its project or what it wants to realize, such as land, buildings, machinery, and equipment.

Real estate valuation information miscellaneous

We have finished with the word asset in real estate valuation, we will clarify the most important real estate terms in general:

• Intended use: The use of the valuation results or valuation review as determined by the valuer based on their communication with the client.

You may be wondering who is the valuer and who is the client, I will introduce you to both:

• The valuer: An individual or a group of individuals or organizations who possess excellent qualifications and capabilities in their real estate field to carry out the valuation in an objective manner away from subjectivity and individual vision.
• Valuation: it means an intention to evaluate a procedural process that determines the value of the asset through the application of international valuation standards
• Client: means the party concerned with conducting the valuation for it, that is if you will, who has an interest in the valuation process regardless of whether it is an individual or more than one.

Here we have clarified the most important real estate valuation terms, although we did not fully understand them, our article was an overview for you to expand in this field and research it more thoroughly, and I hope that we have sparked your curiosity in researching and exploring more in your field.