Many valuers often have this belief that there is just one important date that should appear in the valuation report and the date is the day the property was inspected. However, this position is not 100% correct, as a standard valuation report can have up to four (4) or more dates.
It is very possible that all activities/tasks towards the execution of a valuation assignment can be done in one day, but not in all cases. Hence, it is important for valuers to understand this in order for them to have a report that is of quality and also one that solves the problem of the end user.
We would be examining all the critical dates that should/can appear in a valuation report and the order in which they can appear
This article is part of our series on the effort geared towards improving valuation reporting standard among Nigeria valuers. We have published couple of articles that are available free of charge on our website www.aolmanagementconsult.com.ng/blog along with this very article.
Some questions that may come to mind are asked below and answers provided.
ANALYSING VARIOUS DATES IN A VALUATION REPORT
How many dates can appear in a valuation report? Minimum of one to three
How do you know that we can have more than one date in a valuation report? It is possible (just as stated in the introduction) that all tasks can be done in one day and it is also possible that not all tasks can be completed in one day. Hence, it becomes imperative for the valuer to state in his/her report that date each activity takes place in the course of executing the valuation assignment.
What do the Valuation Standards say about different dates in the valuation report? Three popular standards being used by Nigerian valuers are the Green book, The International Valuation Standard (IVS) and the RICS Red Book Global Valuation Standards. All these valuation standards are in consonance as regard different dates that can appear in a single valuation report.
Specific part of the International Valuation Standard 2022 that talks about 3 dates is within
IVS 101 Scope of Work, under General Requirements (see paragraph as quoted below)
20.3. (h) Valuation date: The valuation date must be stated. If the valuation date is different from the date on which the valuation report is issued or the date on which investigations are to be undertaken or completed then where appropriate, these dates should be clearly distinguished. (Here four dates are mentioned)
What are the different dates and how are they applied in a valuation report?
- The first date that should appear in your valuation report is the date the valuation brief was given. This date must be included in your report, stating if the instruction was verbal, via text message, Whatsapp, letter or via email. In whatever manner the instruction was received, it must have been received on a certain date, which should appear in your valuation report.
- The second date is the date of inspection. The IVS describe it as date investigation was carried out. This date is when the valuer goes out to inspect the property and it can be different from the date the valuation brief/instruction was received. For example, a valuation request can come on a Monday and inspection/investigation can take place on Wednesday. Note that inspection can be carried out more than once and if such is the case, all the dates of inspection and re-inspection must be stated in the same report.
- The third date is the date of valuation. Effective Date/Date of Valuation is the date the valuer carried out his/her basis of analysis to arrive at the opinions or conclusions. This needs further explanation. You may have received instruction on a Monday, inspected on Wednesday and on Friday, after careful analysis, you arrive at your market value. Friday that you arrived at the opinions or conclusions is described as the date of valuation. i.e the date you arrived at your own opinion. This is very significant and must be stated because there are situations that can affect property value spontaneously. In order for the valuer not to be accused of over or under valuation, the valuer must state unequivocally the date the calculations and analyses were done and an opinion was formed.
- The fourth date that can appear in your report is the date the report was issued. This should not be confused with the date of valuation. Instruction can be received on Monday, inspection on Tuesday, application of value on Thursday and issuance or signing of the report can happen on Friday. On the date the opinion of value was arrived at, the valuer may have communicated the value to the client for adoption, while the hard copy of the report remains unprinted and yet to be issued. The date the report is issued is then regarded as report date.
See illustrative table below:
|1||Valuation brief/instruction||Valuer’s report: We refer to your verbal/letter/text message/email received on Monday 14th March, 2022 directing us to carry out the valuation of the property located at XYZ Asokoro, Abuja, FCT|
|2||Date of Inspection||Valuer’s report: Sequel to receiving the instruction, we arranged with the contact person and the property was inspected on Wednesday 16th March, 2022. Where property was inspected more than once, you can rephrase as Our first inspection was carried out on Wednesday 16th March, 2022. However, at the instance of the client, we carried out a second inspection on Thursday 17th March, 2022|
|3||Date of Valuation||Valuer’s report: We are of the opinion (having critically carried market analysis) that the market value of the property described in this report is reflective in the sum of XYZ million, effective from Wednesday 16th March, 2022|
|4||Report Date||Valuer’s report: This report is issued to Mr Obinna Tajudeen Aliko dated this 21st Day of March, 2022|
Above table clearly illustrates the dates that can appear or should appear in a valuation report and the manner/order they can appear.
It is hoped that valuers would read this and see how they can inculcate this in their subsequent valuation reports.
This article expresses a personal opinion as well as excerpts from International Valuation Standards 2022 and RICS Global Valuation Standard 2022 and does not in any way substitute for such professional advice or services and it should not be acted on or relied upon or used as a basis for any decision or action that may affect you or your business, without consulting a qualified real estate or financial Advisor.
Ademola Ladega (ANIVS, RSV MNIM, FIMC) is the founder and managing partner of AOL Consult (www.aolmanagementconsult.com.ng) He is a highly experienced real estate consultant with field/practical experience spanning over 14 years, having previously worked at Ismail and Partners, where he contributed a great deal to the success of the firm and rose to the position of the Head of Valuation and Senior Associate. He is presently serving as the Secretary of the Plant and Equipment Faculty/Professional Group of the Nigeria institution of Estate Surveyors and Valuers, having been appointed in July, 2020
Mr. Ladega has extensive experience of providing valuation services in Nigeria to large public and private companies in many sectors including utilities, banking, insurance, financial services, agro-industrial, shipping, commercial and trading sectors. As well as experience in reporting in accordance with the regulatory requirements of Nigeria, in full compliance with ESVARBON Nigeria Valuation Standards (Green Book) 2018 and other standards such as IPSAS, IFRS, RICS, and IVS 2022