By Kilundo Mbithi

What is it worth? This is a question we ask everyday, even intuitively whenever we’re involved in transactions. The answer to this question becomes even more important when the amounts changing hands grow bigger, like in real estate. No one want’s to sell something for less that its worth or to buy something for more than its worth because both cases constitute a loss on the face of the transaction. That’s why we have valuers to help estimate the value of an asset.

As a valuer I write reports to serve different client needs. Today therefore, I would like you to consider the following ways in which a valuation report would serve you.

Property acquisition

When you are purchasing real estate it is imperative to know whether the piece of real estate you were shown is indeed the one you are purchasing. Many people have purchased huge parcels of land only to discover that they were shown a totally different parcel from the one they purchased. How do you reconcile what is on paper with the ground?

As a buyer in purchases involving apartments, details relating to lease period may not be easy for you to remember. A property whose lease is less than 25 years will give you a lot of headache when it comes to borrowing against it or even selling it.  Furthermore, when you are buying an investment property, you are making decisions based on the return on investment as opposed to when you are buying a home in which case convenience to work or school may be the overriding consideration.  A valuer can help you make informed investment decisions.

Asset riability ratio. There is a law that requires corporations to carry out periodic valuation on theirs assets.  There is a good reason for that law to exist. It is important as a business or as an individual to know your asset liability ratio. This helps you know how to leverage your assets.  Some people are asset rich but cash poor simply because they are not aware that their properties appreciation factor can be very helpful in purchasing income generating properties hence improving their cashflows.

Property sale

If you are not in touch with the market, you can easily make your greatest mistake.  To sell your property for peanuts.  I have seen it happen many times.  The converse is also true.  Hype, emotional attachment to your property may be a great impediment to making an objective decision.  A valuer will come to your aid in this case by giving you an objective opinion based on the present market dynamics.

Sharing of inheritance

Many times we have family disagreements surrounding the sharing of inherited assets. With a property schedule that shows the value of each asset it becomes easy for family members to redistribute these assets to the beneficiaries.  Such cases usually end up in court in which case the court orders for a valuation to be undertaken.

The writer is a registered valuer and real estate agent

 

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