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FAQ’s

Frequently asked questions relating to property valuations and auctions.

FAQ

Valuations

Why use a registered valuer?

There is a constant need to determine the value of property for the purpose of financing, reporting to shareholders, cost accounting, mergers or takeovers… through to rent reviews, rates assessment, expropriations, arbitration and litigation.

A valuer is a professional trained to determine values, execute feasibility studies and provide expert advice on property-related matters. As such, an independent valuer can provide impartial and motivated reports on the value of real or limited rights to land.

The valuer does not invent value, but interprets market forces which determine the value. Hence, the valuer requires a combination of a number of professional qualities and capabilities, and needs a thorough knowledge and understanding of the interacting influences which create, maintain or diminish the value of property or rights thereto.

What should I expect of a valuation report?

The subject property should be accurately described in terms of the legal description, town planning conditions, location and improvements.

The property should be analysed in terms of the conditions of title, adherence to town planning parameters, location and functionality of the improvements.

Leases, where applicable, and their impact on market value should be analysed and discussed. Applicable research as far comparable rentals and sales/capitalisation rates should be undertaken.

Finally, the report should reach a logical conclusion based market evidence and value-forming characteristics of the subject property.

What is Market Value?

Market value, as defined in the International Valuation Standards Committee, is “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion

What is the difference between the price and market value of a property?

Price represents what is actually paid for an asset and may be influenced by a number of generally subjective factors including amongst others: a distressed seller, compulsive buyer or uninformed buyer/seller. Market Value, as defined above, (see What is Market Value) and determined by a valuer, is an objective opinion based on market evidence. The valuer essentially envisages a hypothetical sale between a willing buyer and willing seller.

How is the term "I need a sworn appraisement" used and is it correct?

This term is no longer in use and in fact incorrect. The completed document is known as an “Appraisement” and is completed by an “Appraiser”.

Can an appraiser conduct other valuations i.e. for financial institutions private instructing party's?

No, an appraiser is normally restricted to conducting valuations only in respect of the Administration of Estates Act for estate duty purposes and needs to be a registered Valuer in order to provide non-estate type valuation services.

FAQ

Auctions

Can I place a reserve price on an item?

Yes, the reserve price is usually decided upon, in conjunction with the auctioneer.

Can the auctioneer sell the item below the reserve price?

No, not unless the seller has agreed thereto.

Who pays the commission in the case of movables?

The commission is payable by the instructing party.

When does risk pass in the case of movables at an auction?

Once the item is “knocked down” to the purchaser, it is the latter’s responsibility.

When do I pay for movables purchased at an auction?

During or after the conclusion of the auction – delivery will only be allowed after payment to the auctioneer.

All valuers are registered with the South African Council for the Property Valuers Profession.

All valuers have presented or lectured valuation and property principles to various property professionals and students. Summerton Edelson also actively contributes to the SAIV/SAPOA Annual Property Rental Survey as well as the SAPOA Office Vacancy Report.