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Frequently Asked Questions on Property Valuation

1. Can a valuer tell about approximate value of properties?
No. Every property is different. The characteristics are different. It is as bad as forming opinion about a person by talking to his neighbour. There can be a large variation in the value of two neighbouring Plots or Shops or Flats.
2. Can valuer tell value of a plot, building, shop or flat just by having a look at it ?
No. Value of an immovable property is the value of “rights and interests” associated with the property. Just by knowing the rate of neighbouring property, one cannot get value of any immovable property. Study of the relevant documents is a very important process.
3. Why valuer require documents of the property?

Valuer’s job is to identify the property, ensure whether the construction is authorized or otherwise and also to check whether there are any encumbrances of tenancy, lease, securitisation Act etc. which will have a bearing on the final value. It will not be an exaggeration if one says, value is largely hidden in documents rather than on the site.

4. Why the valuer needs to visit the property?

Firstly, to identify the property, vis a vis the documents, and also to know the amenities, quality of construction and to know the class of neighbourhood etc. He also needs to know whether any hazard is existing or any potential hazard is likely to cause impact on value of the property.

5. Why their is a difference in fees from valuer to valuer ? OR What is a difference between judicious and injudicious valuer?

Difference between a good and bad valuer is similar to that between a good doctor & bad doctor. Every patient of a bad doctor does not die due to a wrong medicine / treatment, but the loss suffered can be very significant and long lasting. Hence it is always advisable to go to a good doctor, a good advocate, or a good valuer. Better to be safe than sorry. Judicious valuer is a true professional who does his work diligently. He has his own data bank. He justifies his report based on logic and reasoning. His reports are well documented. For an injudicious valuer, the only data bank is the borrower (the beneficiary) who tells him the expected rates of the property, so that the beneficiary is benefited. Generally injudicious valuer does not give any basis to support his opinion and is very fast in churning out the valuation report.

6. Can a machinery valuer tell value of a machine by looking at it?

Generally no. In order to know value of a machine, the valuer needs to study its working and he should understand the level of technology, accuracy etc. He has to do market enquiry through contacts and through internet etc. There is so much variety in the machinery types and the Research & Development is this field is very rapid. No valuer on surface of earth can tell the value of the machine correctly just by looking at it or by knowing name of machine.

7. Valuer's job is very easy while doing valuation of open land?

This is a big misconception. Land has its value due to the “bundle of rights” associated with it. If any right in this bundle is missing, it can have impact on value of the property. e.g.

  1. An open plot of land in prime area, if under statutory reservation, may have negligible value as compared to the neighbouring plot.
  2. An open plot surrounded by tall & posh buildings may have zero development potential (& value), if its FSI is consumed by the construction done on adjoining plot. The concepts like TDR, Floating FSI, Global FSI, Fungible FSI etc. have increased the complexity related to valuation of land. In fact valuation of an open plot of land needs extra care to ensure its potential development.
8. It is true that a property having sanctioned building plan is more valuable than a property without such plan?

Having a sanctioned building plan is an important attribute of a property. It conclusively proves its legality w.r.t Town planning acts and its identification becomes exact. Hence from the point of view of “security for loan”, the property having a sanctioned building plan is more valuable.


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