Valuation report is defined by Friedman and others (2005) in the Dictionary of Real Estate Terms as a written explanation of a property’s value, including the data and reasoning used to derive that value. Valuation reports must be written in a logical, precise and well-arranged manner. It should also be accurate and consistent so as to convey the intended message i.e. finding and valuation opinion to the end-user of the report. Valuation report could be in oral, written form, and it should consist of the following essential outlines which form the central issues to be addressed in the final valuation report.
- Brief or introduction: Here, the client gives an instruction to the Estate Surveyors and Valuers on exactly what should be done as regards the valuation exercise. This will guide the Estate Surveyors and Valuers on how to carry out his service to the satisfaction of the client.
- Date of inspection/Valuation: The date of valuation will be the last date the valuation exercise is being carried out on the subject property and not necessarily the inspection date.
- Purpose and Scope: This is determined by the Estate Surveyors and Valuers from the information extracted from the client’s instruction. This is very essential as it will be a guide to the Estate Surveyors and Valuers in carrying out the valuation successfully. The purpose or scope may be for mortgage, sales/purchase, probate etc.
- Location: This includes the proper and clear description of property’s location, neighbouring land use zoning, public infrastructural facilities; it also includes the full address of the subject property, the local government area and other necessary descriptions. It must be easily understood by the end-user of the report.
- Site Description: This describes the site as regards the plot size, shape, topography of the area, and design; it also includes accommodation details.
- Neighbourhood Character: This describes what is available in the area in terms of the type of use (commercial, residential and industrial); this helps to determine the highest and best use of the area and to ascertain if there is any compatibility of use.
- Accommodation Details: This describes the accommodation types such as; flat, bungalow, detached house etc. it also includes the services within the property, describing the floor, wall, roof, and door finishes, etc.
- Utilities/Services provided within the subject property: This describes the infrastructural facilities available in the property. For example, water, electricity and telecommunication, etc.
- General Condition: The physical condition of the property as a whole, for example, cracks, leakages and falling fences; the overall maintenance culture adopted for such property should be well described.
- Tenure/Title/Subsisting Interest: The type of document of ownership subsisting in the property, the unexpired term (if the property is under a lease agreement) should be properly described; where the property title is unavailable, it must be clearly stated in the report. This is done so as to ensure that the subject property is free from any encumbrance.
- Assumptions: According to word web (2008), assumption is a statement that is assumed to be true from which a conclusion can be drawn. It is essential that all the assumptions made in relation to the valuation exercise be included in the report. It should however be noted that this assumption is not far from the truth because it is within tolerable limits of reasonability.
- Basis and Method of valuation analysis: This will be determined by the Estate Surveyors and Valuers drawing from the purpose communicated by the client for which the valuation is to be carried out. The method may include residual, profit/account, contractor’s method etc.
- Opinion of Valuation: This expressly states the valuation opinion as at a particular time.
- Caveat / Limiting Condition: These are conditions that the Estate Surveyors and Valuers will give to his client to take i.e. if any part of the report is invalid. And if any change needs to be made, the Estate Surveyors and Valuers should be called upon, and if he is not called upon, the report will be invalid. At times, the Estate Surveyors and Valuers need to state in the report that the report is only for the addressee.
