It is very common to require the expertise of a Certified Practising Valuer to obtain justice from a property related legal dispute.
Valuations undertaken for legal purposes are primarily for commercial contractual disputes or for family law. If the legal matter is on course to be heard in Court, the valuer is then likely to be acting as an ‘Expert Witness’, whether on behalf of one or both parties. That is, in acting as an Expert Witness, the Valuer has a higher duty to the Court and the Judge “to assist the Court in arriving at the truth”, and “to educate the Court to the same level of understanding as the expert”, as described by the Australian Property Institute.
It is therefore paramount that the Valuer has sufficient experience, to not only carry out a thorough and accurate valuation, but also to adequately convey and explain the valuation in a straight forward and logical manner, so that the Court and Judge completely understand it.
Some of the critical aspects the valuer needs to focus on include: accurate description of the property, selection of ‘relevant’ sales, sufficient analysis, presentation of these sales that demonstrates a hierarchy of relevance, and finally calculating and adopting a value supported by commentary that leads to a sound and logical conclusion.
Shortfalls include: not determining the true state of the interior of the sales, such as age and quality, and floor area. In selecting the appropriate sales, there are different markets for example (different types of buyers) for single storey versus double storey houses and townhouses, and therefore it is often not appropriate to use double storey dwelling sales for a single storey dwelling being valued, as the analysed prices rates per square metre of floor area will vary notably between the two types, and adjustment of these rates then becomes too ‘subjective.’
In a changing market, it is essential to research sales evidence not just for the original valuation, but conducting research again for the latest evidence for each subsequent meeting with any opposing valuer (i.e. a ‘Valuers Conference’), and again prior to a Court attendance, to ensure that the valuation reflects the current (‘todays’) market. The exception to this is where the valuation was undertaken ‘retrospectively’ as at a historic fixed date.
In terms of analysis, the price of the comparable sales, should ideally be analysed to separate the components of value for the land and the improvements and expressed as rates per square metre for each component. Then, comparison and adjustment can be made to these rates, in order to adopt appropriate rates for the subject property.
A valuation for legal purposes is therefore a complex assessment, involving a critical and prescribed process that requires considerable experience. At Egan National Valuers, we have specialist legal valuers at each of our offices to act on your behalf.