Almost everyone buys or sells real
estate at some point in their lives. This is a process that involves several
essential steps and specific documentation. One of the most important documents
involved in the purchase or sale of real estate is real estate valuation, which
is drawn up by a specialist called a real estate valuer. The largest real
estate company in the Baltics, <a target="_blank" href="http://www.ober-haus.lv/en/?utm_source=1188&amp;utm_medium=1188&amp;utm_campaign=1188&amp;utm_term=Ober%20Haus%2C%20property%2C%20real%20estate&amp;utm_content=Ober%20Haus%2C%20property%2C%20real%20estate">Ober
Haus Real Estate Latvia</a>, explains
what you need to know about real estate valuation.<h2>What are the most common questions a valuer is asked?</h2>“Taking into
account that there are different types of real estate (valuation objects),
starting from standard apartments to complex commercial objects and specialised
property, the questions differ depending on the type of property.In the segment
of <a target="_blank" href="http://www.ober-haus.lv/en/services/residential/?utm_source=1188&amp;utm_medium=1188&amp;utm_campaign=1188&amp;utm_term=Ober%20Haus%2C%20residential%20property%2C%20real%20estate&amp;utm_content=Ober%20Haus%2C%20residential%20property%2C%20real%20estate">residential
property</a>, clients are, of course, most interested in the valuation results,
in order to make sure that the price of the purchase/sale transaction
corresponds to the market situation, as well as to evaluate the mortgage
options suitable for their circumstances. In addition, clients are often
interested in how the value of the property might change after renovation of
the premises, as the valuer can provide advice not only on the current
circumstances, but also on the property in a future condition, for example
after completion of planned construction. When the client (buyer) evaluates the
possibilities for buying real estate, sometimes they need advice on the legal
situation and technical condition of the property to identify potential
problems and possibly get a better offer from the seller. The valuer is an
independent specialist who is able to objectively assess the situation and
circumstances that are relevant to the transaction, or help the client choose
the most appropriate of several purchase options.In the segment
of <a target="_blank" href="http://www.ober-haus.lv/en/services/investment-advisory/?utm_source=1188&amp;utm_medium=1188&amp;utm_campaign=1188&amp;utm_term=Ober%20Haus%2C%20comercial%20property%2C%20real%20estate&amp;utm_content=Ober%20Haus%2C%20comercial%20property%2C%20real%20estate">commercial
property</a>, valuation is important for the client to assess the current
circumstances of the business and possible future scenarios for decision-making
purposes. If it is an existing property with cash flow, the valuer provides an
opinion on how the rent corresponds to market conditions, as well as their
professional opinion on the best and most efficient use of the property, which
can sometimes help the owner significantly improve the performance of their
business. Before the implementation of a development project, the valuer’s opinion
on the project’s estimated revenue and expenses can protect the entrepreneur
from significant losses, confirm the project’s potential for investors and
credit institutions, or help identify more appropriate solutions given the market
conditions,” explains the head of valuation department at Ober-Haus.<h2>What documents do valuers need from a client?</h2>“As I mentioned
previously, there are different types of real estate. Consequently, the
required information and documentation depends on the type of object to be
assessed and the valuation task. In standard situations, the valuer expects a
plan of the premises (a copy of the cadastral survey), a printout of
the land registry and a land boundary plan, if it is not a
condominium. If construction is planned, then a building permit, project
documentation and cost estimate are also required (if the
construction of the property is in progress, then information on the completed
work and related costs is also required to determine the stage of completion
and additional investments required).When valuing
commercial property, it is important for the valuer to know the list of
tenants and their contract terms, as well as the property income and
expenses. In addition, they require information on planned capital
investments, financial liabilities and expected changes. For the valuation
of specialised properties, the valuer also needs to get acquainted with the financial
indicators of previous years and the planned budget.”<h2>What do clients find most confusing about valuation?</h2>“Sometimes,
there is a misunderstanding about the valuation result. It is important to
distinguish the concepts of “price” and “market value” of the
property. It should come as no surprise that the price of the property may
differ significantly from the value determined by the valuation, assuming that
the valuer has done the work properly. For example, the seller may want to sell
their property quickly at a lower price, or the buyer may be particularly interested
in a specific object for personal reasons and therefore willing to pay a price
above the value. In determining market value, the property is assessed
objectively by accepting a transaction between parties that are not related,
are not under duress or pressure and do not have any special interests, in
accordance with typical market practice.In commercial
property valuations, sometimes clients do not understand why they should
disclose detailed information about the property circumstances and concluded
lease agreements (business secrets!) to the valuer, but in order to determine
the value of the property most accurately, the valuer must have the same
information as a potential buyer. This is especially important when the
addressee of the valuation is also a credit institution. Despite what clients
may think, often complete information and assessment of the real circumstances
with as few assumptions on the part of the valuer as possible are what gives
credit institutions the greatest confidence in the value of their collateral
and possibly more favourable conditions for the client’s credit obligations.”<h2>Are there any stereotypes about valuation?</h2>























“There seems to
be a stereotype that valuers have the freedom to express their opinion without
any formal criteria, and an undesirable result is often perceived as a
consequence of quick work and “not going deeper”. In fact, valuation is
a strictly regulated profession and the work results must be based on methods
that comply with valuation standards, market research and comparable
transactions. A certified valuer is personally liable for their conclusion and has
likely put a lot work into the assessment before announcing a potentially
controversial result, while protecting themselves, their client, the credit
institution and, more broadly, the stability of the Latvian financial system. A
competent valuer will be able not only to logically explain the calculation
process and substantiate the result, but also to assess the impact of
previously unknown or specified data and assumptions on the determined value.
However, if the client has reasonable suspicion that the valuer has worked improperly,
it is possible both to turn to another valuer for a second opinion or contest
the valuation through the Latvian Association of Real Estate Valuers, which is
binding for all <a target="_blank" href="http://www.ober-haus.lv/en/services/valuation/?utm_source=1188&amp;utm_medium=1188&amp;utm_campaign=1188&amp;utm_term=Ober%20Haus%2C%20property%20valuation%2C%20real%20estate&amp;utm_content=Ober%20Haus%2C%20property%20valuation%2C%20real%20estate">certified
real estate valuers in Latvia</a>.”

"Ober Haus Real Estate Latvia" SIA

Ober Haus Real Estate Latvia SIA, Daugavpils birojs

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Almost everyone buys or sells real estate at some point in their lives. This is a process that involves several essential steps and specific documentation. One of the most important...

What should buyers and sellers of real estate know about real estate valuation?

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