Principles of Valuation for Professionalism-myassignmenthelp.com

Question: Discuss about thePrinciples of Valuation for Public and Professionalism. Answer: Introduction A land is an immovable object, and for it to become productive, it requires the input of capital and labor. Determination of the value of the land, the market value, and the highest and best use is vital in the valuation process. This paper, therefore, discusses this factors and how they influence the property and land use. Steps a valuer must take when accepting a matter It is important for a valuer to determine and evaluate the value of something before getting into an agreement. Valuers should maintain high standards of integrity and honesty at all times. Their activities also should not be detrimental to their clients as well as to the public, professionalism, and their national valuation body. When accepting a matter, therefore, its crucial to follow the following steps; The valuer should first correctly identify the problem before entering into an agreement or accepting the assignment. He/she should be sure that they have the experience, skills, and knowledge to handle the assignment competently. Should then prepare a work file for the assignment. The work file should be retained even after completion of the assignment for a minimum of three years. Disclosure or a valuation report should be developed and the opinions, analyses, and conclusions communicated to the users. Should have a copy of a confirmation of the clients instructions. Should have sufficient documentation and file notes that substantiate the valuation regarding the inquiry, calculations, deductions, and objective comparison. Finally, the valuer should possess a copy of a report prepared or a copy of each valuation (Millington, 2013) and provide a well-researched, honest, and realistic market appraisal of the property. Difference between the Spencers and IVSC definition of market value From Spencers case, the market value can be defined as the estimated amount that a property should exchange on the exact date of valuation. The transaction should be between a willing seller and a willing buyer. A proper marketing should as well be involved, and the parties should act prudently, knowledgeable, and without compulsion. There is a difference between desiring to sell and willing to sell. These two should be distinguished and never be confused. Normally, it is important to determine the test of the value of land. Even in instances that there is a willing seller but no willing buyer at the moment, the property cannot be described to lose value. The IVSC definition The IVSC borrowed so much from Spencer their definition. The definition involves exchange of an asset on a particular day, without compulsion, after proper marketing, in an arms-length transaction, and both parties should be acting knowledgeably. Difference Market value according to the IVSC offers a broad definition as compared to Spencers. It includes assets in its definition which thereby covers some items apart from the land. These could include; license rights, company shares as well as the capital equipment. Spencer definition includes the concept of highest and best use of the property/land, but the IVSC does not expressly mention this concept. However, its argued the fact that the definition includes the concept of both parties acting knowledgeably, then in one way or another, they could be aware of the highest and legal use of the property in question. The Spencer definition assumes that the parties involved are not coerced either are they over-anxious, and the negotiations are amicable, but these are not stipulated in IVCS definition. The concept of market value gives individuals an opportunity to value their assets in a competitive (Parker, 2016) and open market. Inherent and external features of land Inherent features of land arise directly usually from the land in itself, and they are factors of value. It is important to put these inherent factors into consideration while performing the valuation of a land. Land area shape, as well as, size is one such factor that is very vital. For instance, if one piece of land is significantly larger than another, then it stands a better chance of rating higher and having much more worth. Even given that all other land factors are equal and remain constant, a parcel measuring 15 meters by 40 meters, for example, is of greater value compared to a piece of land measuring 10 meters by 40 meters. Pieces of land giving wider frontiers usually receive greater emphasis, particularly with project builders. Topography (steepness, creeks, rock shelves, and trees) as well plays a crucial role in determining the value of land as it contributes to the added cost of construction. Other inherent factors influencing the land value are; the soil and subsoil ( sand, clay, and rock), location/position of the land (semi-slum or sought-after area), and views such as harbor and river, sea and beach, parks and golf courses, and the landscape (Xiao et al., 2006). These features determine the value of the land significantly. External features External features typically involve those factors that are outside the land parameters. Usually, they are found in the neighborhood, nation, or state and do affect the land value. These factors include; the distance to amenities, the surrounding environment, the conditions and nature of the streets, services availability, and the access rates. The more developed the surrounding area is, the more the land will value higher. This is true for all other features. Typically, the external features are more dynamic as they keep on changing from time to time as compared to the inherent features. Highest and best use Highest and best use is a key appraisal as well as a zoning principle that is normally employed in valuing a property or a parcel of land. The value and the use of property or land are linked closely and therefore, what results in a propertys or lands present value, is its highest and best use. In turn, the net return of the greatest value is achieved for over a given period as well as for the foreseeable future given its within the applicable constrains. The term is employed in a probable, reasonable, and legal use of either an improved property/land or a vacant land which is appropriately supported, financially feasible, and physically possible and should result in highest value (Oprescu et al., 2014). The highest value for an improved land is different from a vacant land and it should, therefore, include the community development goals and contribution to the community by a specific use. Appraisers analytical skills and judgment (their opinion) has a great implication on this conc ept. It has to identify the motivations of probable purchasers putting into consideration the benefits that normally accrue to property ownership. The market value of a land is primarily established through the laws of supply and demand. Both price expectations of a buyer and a seller are crucial in determining the value of a parcel of land or any other property. Both the buyer and the seller play a vital role in the subjective concept of market value. It becomes critical, therefore, for purchasers to analyze the most profitable use of the land either in a vacant state or an improved state. It is also important to understand that the highest and best use of a land or any other property for that matter, can be as a result of a class of uses rather than for a specific use. Conclusion Valuation of a land is important in determining the annual returns. Determination of the market value as well as a significant role to play in the whole concept of the principles of land and property valuation. Its, therefore, important to understand all these variables and how they affect the highest value of the land. References Millington, A. (2013). An introduction to property valuation. Taylor Francis. Oprescu, C., Buse, L., Ganea, M. (2014). Highest and Best Use Problems in Market Value Appraisals (No. eres2014_230). European Real Estate Society (ERES). Parker, D. (2016). Market Value. International Valuation Standards: A Guide to the Valuation of Real Property Assets, 3-35. Xiao, J., Shen, Y., Ge, J., Tateishi, R., Tang, C., Liang, Y., Huang, Z. (2006). Evaluating urban expansion and land use change in Shijiazhuang, China, by using GIS and remote sensing. Landscape and urban planning, 75(1), 69-80.