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Why Property Valuation is important in property transactions

Why Property Valuation is important in property transactions

We bought land as a chama on the outskirts of Nairobi five
years ago with the aim of subdividing it into plots and selling them at a
profit. However, the area chief just informed us that the government intends to
purchase land in the region to build a hospital and a public school. We
understand that we will be monetarily paid, but what can be done to ensure that
the State does not underpay us
?” Said Lydia, in Nairobi.

To value your land at current market rates, you should hire a professional valuer
who is registered with the Valuers
Registration Board (VRB).

Property valuation is the process of analysing real estate and forming a professional
opinion on its value based on scientifically validated methods.

Property valuation is important for a variety of reasons, including buying and selling
property, insurance, advancing loans against securities, dispute resolution,
court sureties, book value, and determining land rates.

Because you will be able to bargain, valuation will be useful to you before the State
buys your property through compulsory acquisition.

A valuation study can assist in calculating compensation amounts, and it should
only be done by professionals.

Before arriving at a market price, valuers analyse various factors, including the
property’s location, condition of repair and maintenance, and soil qualities.

Topography, geological and environmental components, financial issues, and current
macro-economic and fiscal policies are among the other determinants.

They are also interested in social, political, and cultural concerns, as well as a
variety of legal issues surrounding the instrument of ownership.

While it is important to use professionals in real estate transactions, prospective
purchasers are confused when two different valuers report differing market
values.

The argument for the various values could be that the variables considered by
valuers are constantly changing. The margin of error should not be so large
that it raises doubts about the valuer’s reliability.

Professional valuers utilize a variety of methodologies, but the investment approach and the
depreciated construction cost and sales comparable method are the most
frequent.

The
plot number, date of inspection, location of the property, and details on the
title deed are all included in valuation reports.

The
report also includes social and infrastructure services such as roads, power,
and piped water within and around the property. It also includes information
about the plot’s shape, topography, and soil type. Before concluding the report
with the valuer’s view and an estimate of the market value at the moment,
valuers describe the type of development on the plot. In order to prevent
making hurried decisions, it is best to hire a registered valuer in property
transactions.

Harold
Ayodo an Advocate of the High Court of Kenya

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