Property Valuation Kenya: What a property valuation Report contains?
Property valuation in Kenya has seen growth in the past decade or propelled by growth in the real estate sector. Financial institutions like Banks, SACCOs, or micro-finance institutions normally seek a property valuer to establish the value of a property for them. You can also be compelled to do a property valuation for accounting reporting and tax purposes. Regardless of what necessitated you to seek a property valuation service, you need to have a clear picture of what to expect in a property valuation report.
A property valuation report is a report that indicates the price rate of a particular property. The property price is also called the market price of the property. A property valuer determines the value of the property using approaches which will explain in the subsequent paragraphs. A property valuation company varies in terms of the information they offer you as part of their valuation. Some offer strictly the information about the property price while others also detailed information about the neighborhood which is very useful in decision making.
What to expect from a property valuation report?
- List of registered proprietors or owners
In strict sense, not all registered valuers own the companies they work in. However, a good number of property valuers in private practice have registered their firms and so they secure jobs using their companies. In places where the owners of the firm are not valuers themselves, then the organization must indicate the registered valuers whose papers the organization got registered to offer valuation services. This is a legal requirement in Kenya and as well as other countries, though with variations expected.
- A description of property as per the laws which includes the structure of the land
This include the name on the title of the property, the size of the land on which the property sits and the nature of the land. The description is normally accompanied by annexes like an extract of Google map showing the location, surveyor map indicating the point coordinates of the land as well as details of the activities which go on in the property.
- Zoning or Resource management
This information comes from the lands office. The land planned use according to the local authority planning department.
- Valuation includes the market rate of the property
This is the section of the property which every client run to the moment they get a property valuation report. As a property valuer in Kenya, we have observed this over and over again. The possible reasons for this are pretty simple. Every client wants to see the value of their property.
In the region section, the evaluator will be putting in the complete details of the area of the property as well as the demographic description. It also consists of all the facilities and features that will be found in the area as well as its neighborhoods.
- Basic details and completed description of the property
This is a section in the valuation report where you will find the details of the property that provides a detail of the residential market value and the commercial market value. Other factors that do not affect the final price are ignored altogether.
- A detailed description of the improvements
Description about the improvements in the property valuation report is something that is considered as a very important part in the report. When there is a chance of improvement in the property, there is a large chance for the increase in its value. This is the reason why such details are described in the valuation report in a detailed manner. As a property valuer Kenya, we have always emphasized this part of the valuation because many clients often focus on the original investments and forget the subsequent improvements.
In one of our assignments as property valuer in Kisumu, we found the cost of improvements approaching fifty percent of the original cost of the property. In case a client missed this information, the property will end up being undervalued to the detriment of the client.
- The methods used in property valuation
As a Kenya real estate valuation firm, we invest quality time with our client to understand their objective for obtaining a property valuers Kenya service so as to choose the best method. In property valuation, there are at least three methods of valuation to use. These include;
- Sales approach
The sales comparison approach considers the selling prices of similar, recently sold properties. Those sales prices are adjusted to reflect the time, conditions, and differences between the comparable properties and the subject property. The result of the adjustments is a subject value estimate.
- Income appreciation approach
The income approach, sometimes referred to as the income capitalization approach, is a type of real estate appraisal method that allows investors to estimate the value of a property based on the income the property generates. It’s used by taking the net operating income (NOI) of the rent collected and dividing it by the capitalization rate.
© Depreciated Replacement cost
This method is a form of cost approach that is defined in the RICS Valuation – Global Standards 2017 (RB Global) Glossary as: ‘The current cost of replacing an asset with its modern equivalent asset less deductions for physical deterioration and all relevant forms of obsolescence and optimization. ‘
- Getting the right information of the neighbourhood
When we want to know the right market value of our plot or property, it is natural to compare it with the neighbouring property. It is thus a fact that one of the major methods used during property valuation deals is a sales comparison approach. Hence it is very important to check the rates of the properties that are similar, and those that are found in the neighbourhood. When an evaluation is made, you need to give the evaluator the details of the rate of property in neighbourhood, property value and sales price (if it has been sold), price of property and other details so as to get yourself a proper valuation result of your property.
These points together form your property valuation report. Before you wish to sell or let your property better is to get it valued correctly by leading free home valuation companies. West Kenya Real Estate Ltd is a registered real estate management, development and valuation company based in Kisumu but conducts valuation anywhere in the republic of Kenya.
We are the leading property valuers in the western counties of Kisumu, Vihiga, Kakamega, Migori, Kericho, Kisii, Nyamira, Homa Bay, Siaya, Migori, Busia and Bungoma. We are available to undertake any valuation work anywhere in the country. Talk to us today.