Market value — The definition of market value is as defined in Standard I of this document. Mortgage — This term is generally understood to be a pledge of an interest in property as security or collateral for repayment of a loan with a provision for redemption on full repayment. In the event the borrower defaults, the lender has the right to recover the loan by disposing the property pledged through a due process of law.
The valuation opinion arrived at shall be reported as per the provisions of this document on Valuation Reporting. Loans from banks and financial institutions are secured by specific property. Valuers need to have a general understanding of the requirements of such institutions and possibly the structure of loan terms and agreements.
Based upon market information, each approach is to be used. Construction costs and depreciation, wherever applicable, should be determined by reference to an analysis of market based estimates of costs and depreciation. Lending institutions may at times like to have a property assessed as part of a portfolio of properties. In such instances, the distinction between the value of the individual property, assuming it is sold individually, and its value as part of the portfolio, should be clearly expressed.
While the valuer may comment on the expected demand and marketability of the property over the life of the loan, it is normally outside the scope of the valuation exercise to advise on the ability of a tenant to meet future lease obligations. This does not preclude consideration of the existing owner as part of the market,.
Such price inflations by special considerations or concessions are to be ignored in assessing the Market Value. For loan security purposes, such properties will normally be valued on a vacant possession basis and a valuation based on highest and best alternative use is applicable. The valuer should alert the lending agency as to the risks involved, if any, in lending to specialized properties. In such cases, the lender should be made aware by the valuer the difference in value that may exist between an operating concern and a non operating concern where the business is closed.
If the income from a property is critically dependant on a tenant or tenants from a single sector or industry or some other factor, which could cause income instability in future, the valuer should address the same suitably.
In some cases, an assessment of the value of the property based on an alternative use, assuming vacant possession may be appropriate. Assumptions as to planning and. The approach to the valuation of development properties will depend on the state of development of the property at the date of valuation and may take into account the degree to which the development is pre-sold. The valuation approach may need to be discussed with the lender prior to undertaking the valuation.
The valuer must make a reasoned estimate of the development period from the date of valuation, evaluate the market behavior during the period of development, consider risks involved during development and highlight any other factors which may have an effect on the value of the property. As the impact of a constraint on the price obtainable will depend upon the specific circumstances under which the sale takes place, it is not realistic for the valuer to speculate on a price that could be obtained without knowledge of the reasons for the constraint or the circumstances under which the property might be offered for sale.
In reporting market value for lending security purposes, the valuer shall make all disclosures as required under the standard on Valuation Reporting. In following this application, any departures must be in accordance with provisions in the standard on Valuation Reporting. All banks and housing finance institutions shall have a year round system of receiving applications from intending valuers seeking empanelment.
All such applications shall be received in the prescribed format and kept in a list. The application format shall be always available on the website and should be easily downloadable. As and when the requirement arises, the number of valuers required shall be empanelled and once empanelled, the valuer shall be on the panel for perpetuity unless and until removed or dismissed.
All applications shall be accompanied by relevant documents to substantiate the educational qualifications and experience, etc. Two passport size photographs shall also have to be provided by the applicant. All applicants shall be received by the Branch Manager for processing. From this list, the required number shall be empanelled while the remaining applicants shall remain on the wait list.
At a latter date, when the need for empanelling more valuers arises, valuers from this panel shall be empanelled. In order to carry out the performance review, every bank and housing finance institution shall constitute a committee called Annual Valuation Review Committee, comprising of senior officers along with at least one independent knowledgeable person of repute.
This committee shall review the performance of the valuers and recommend continuity or removal, as the case may be. There are bound to be a variety of conflicts when hundreds of valuers are empanelled by various banks and housing finance institutions across the country. In case of any misconduct by any valuer, the bank or housing finance institution shall have the prerogative to recommend removal of the valuer from the panel.
The steps involved in the process will be as given hereunder :. In case the Committee opines that the charges against the valuer are serious, the valuer may be removed from the panel and depending on the seriousness of the case, he may be empanelled once again after a gap of 5 years.
The committee may also consider imposition of suitable fines depending on the severity of the case against the valuer. Names of all such valuers shall be placed in a caution list of the IBA. They shall also nominate on senior officer as the Nodal Officer for all valuation related matters for coordination internally as well as with the IBA. Work shall be offered to valuers based on their performance and if for any reason, a valuer does not take up the work, the same should be recorded and then the work allotted to another valuer.
Format of Valuation Report for all properties of value more than Rs. I Introduction 1. Name of Valuer 2. Date of Valuation 3. Purpose of Valuation 4. Location of the property in the city Characteristics 2. Municipal Ward No. Postal address of the property 4. Layout plan of the layout in which the property is located 6.
Details of Roads abutting the property 7. Demarcation of the property under valuation on a neighbourhood layout map 8. Description of Adjoining properties 9. Survey no. Plinth area , Carpet area and Saleable area to be mentioned separately and clarified Any other aspect. III Town Planning 1. Master plan provisions related to the property in Parameters terms of landuse, 2. Development controls, 4. Zoning regulations, 5. Ground coverage, 7. Transferability of development rights if any, Building bye-law provisions as applicable to the property viz.
Comment on surrounding landuses and adjoining properties in terms of usage. Ownership documents, 2. Title verification, 4. Details of leases if any, 5. Tenureship in terms of freehold or leasehold, Restrictive covenants if any, 6. Agreements of easements if any, 7.
Notification for acquisition if any, 8. Notification for road widening if any, 9. Heritage restrictions if any. All legal documents, receipts related to electricity, water tax, property tax and any other building taxes to be verified and copies as applicable to be enclosed with the report, Comment on transferability of the property ownership, V Economic 1.
Details of ground rent payable, Aspects of the 2. Details of monthly rents being received if any, Property 3. Taxes and other outgoings, 4. Property insurance, 5. Monthly maintenance charges, 6. Security charges, etc. VII Functional and Description of the functionality and utility of the property in Utilitarian terms of : Aspects of the 1.
Space allocation, Property 2. Storage spaces, 3. Utility of spaces provided within the building, 4. Car parking facilities, 5. Balconies, 6. Water supply, 2. Storm water drainage, b Description of other physical infrastructure facilities viz. Solid waste management, 2. Electricity, 3.
Availability of other public utilities nearby, c Social infrastructure in terms of 1. Schools, 2. Medical facilities, 3. Recreation facilities in terms of parks and open spaces. IX Marketability Analysis of the market for the property in terms of of the Property 1. Locational attributes 2. Scarcity, 3. Demand and supply of the kind of subject property.
X Engineering Description of engineering and technology aspects to include and Technology Aspects of the 1. Type of construction, Property 2. Materials and technology used, 3. Specifications, 4. Maintenance issues, 5. Age of the building 6. Total life of the building, 7.
Extent of deterioration, 8. Structural safety 9. Protection against natural disasters viz. Visible damage in the building if any, Common facilities viz. System of airconditioning, Provision for fire fighting,. Copies of plans and elevations of the building to be included. XI Environmental 1. Use of environment friendly building materials, Green Factors building techniques if any, 2. Provision for rain water harvesting, 3.
Use of solar heating and lighting systems, etc. XII Architectural Descriptive account on whether the building is modern, old and aesthetic fashioned, etc. A detailed analysis and descriptive account of the approaches, assumptions made, basis adopted, supporting data in terms of comparable sales , reconciliation of various factors, departures, final valuation arrived at has to be presented here.
XIV Declaration I hereby declare that :. Name and address of the Valuer …… Approval No. All other documents have to be procured by the Valuer. Shri Rakesh Sethi Ms. Annuradha Rao Dy. General Manager Dy. Chief Executive Sr. General Manager Asst.
Vice-President Dy. National Housing Bank. Dewan Housing Finance Corporation Ltd. Bharti Mannan Asst. Open navigation menu. Close suggestions Search Search. User Settings. Skip carousel. Carousel Previous.
Carousel Next. What is Scribd? Explore Ebooks. Bestsellers Editors' Picks All Ebooks. Explore Audiobooks. Bestsellers Editors' Picks All audiobooks. Explore Magazines. Usually after a loan has been granted, HFCs do regular property valuation to understand how the property value is changing.
There is a need for revaluation at regular intervals so that the lender is assured of little or no deviation in the Loan to Value LTV ratio and also that the property is valued at its current fair market value. Presently, valuation is undertaken independently by the HFCs and there is no uniform policy for valuation of properties and appointment of registered valuers for the purpose. No prescribed qualification for empanelment of registered valuers is in existence.
Against such backdrop, NHB has introduced guidelines vide its circular no. In accordance with the NHB circular, HFCs must have a Board approved policy for valuation of the property and collaterals accepted against loans. The policy shall inter alia be formulated on the following guidelines: 1. The registered valuer must be independent and not have any direct or indirect interest. Further, where the value of the property is Rs. The Board must decide the frequency of valuation of properties and securities based upon the past volatility in prices and such frequency shall be reviewed once in a year.
Any change in the method of depreciation should reflect the change in the expected pattern of consumption of the future economic benefits of the assets.
In situations where the value of the property is substantially impaired by an event, for example, due to earthquake or any other natural calamity, immediate revaluation must be facilitated. Additionally, HFCs shall also have a Board approved comprehensive policy in place for valuation of its own properties and such a policy shall inter-alia cover procedure for identification of assets for revaluation, maintenance of separate set of records for such assets, the frequency of revaluation, depreciation policy for such assets, policy for sale of such revalued assets etc.
A policy for revaluation of the own assets of the HFC must be prepared. The revaluation policy shall be based on the following instructions from NHB: 1. It is necessary that the revaluation reserves represent true appreciation in the market value of the properties. Rao eMAIL : drpsnrao hotmail. Dipankshi Singla. Henry Koto. FierDaus Mfmm. Chu Minh Hoi. Lord Jumong. Arj Daqui. Emmanuel Oladele. More From Gaurav saboo. Gaurav saboo. Monica Kumar.
Popular in International Valuation Standards Council. Paul Heherson Balite. Asti Widyahari. Jose Lopez. Jigesh Mehta. Nurdin Latief. Danilo Urruchurto. Ranganathan Krishnan. Vishal Balraj. Bagus Deddy Andri.
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