Understanding the term Property Valuation
Although the term “Property Valuation” generally has to do with determining or estimating the value of a property, many South Africans use the term Property Valuation in different contexts and mean slightly different things. The term Property Valuation is defined in South African legislation, but the term is also used informally to refer to various methods of guessing, estimating, predicting or forming opinions about property values. Essentially, the term property valuation means something different to various entities or groups of people that use the term formally and informally.
Different uses of Property Valuation
The legal definition of a Property Valuation
When Professional Registered Valuers and Financial Institutions talk about a property valuation, they mean the determination of the value of immovable property as defined in the Property Valuers Profession Act 47 of 2000. Such property valuations are formal documents, that may only be written by a person registered with the South African Council for the Property Valuers Profession (SACPVP). These valuations need to adhere to the IVS (International Valuations Standards) adopted by the SACPVP, as well as the South African Institute of Valuers (SAIV). As a result, such valuations take a lot of time to research and are costly to write, but give a very good answer as to what the value of a property is, and why it is the value of a property.
A Homeowner’s Property Valuation
When a homeowner talks about a property valuation, they might be referring to the price that they could sell their house for, or the value at which the municipality taxes their property.
An Estate Agent’s Property Valuation – sales prices in your neighborhood
When estate agents talk to homeowners about a property valuation, they would typically refer to an expert opinion of the property’s value relating to selling the property at a market price. Many estate agents advertise free valuations, in an effort to meet potential home sellers. Estate Agents who know local markets could advise on good asking prices by giving an opinion of what you could sell your property for. They use comparable market analyses to show sellers what houses are selling for in the market and how their houses compare to recent successful sales. Estate Agents typically offer this service free of charge to homeowners that want a valuation on their house for determining the asking price as part of a marketing strategy.
Transfer Duty Real Estate Valuation for SARS
Two Valuations / Independent Estate Agent Valuation
For transfer duty calculation, SARS and transfer lawyers might ask for the transfer attorney to provide two valuations from independent estate agents. SARS seems to use the specific term Independent Estate Agent Valuation or two valuations from independent estate agents. These reports provide information about what the estate agent believes the value of the property is, and need to comply to standards acceptable to SARS for the purpose.
Property Valuation Conclusion
It is clear that the term property valuation is used formally and informally in South Africa, to refer to different context within which information or opinions of property value are required. The answer to the question depends on who it is that asks the question, how accurate they need the answer to be, and what they want to do with the information.
