Nous and fear guide the valuer

WHAT'S IT WORTH? A valuer will weigh physical features, location, size, view, quality and age, differently, based on analysis and good common sense.

The techniques involved in valuing a property are similar to those most of us use when buying a used car, according to the man recognised as the father of the profession in New Zealand, associate professor Rodney Jefferies, who heads the Property Group of Lincoln University's Commerce Division.

Professor Jefferies says in making a valuation, a valuer goes through a series of checks that replicate what any prudent buyer would do when pricing a property. "It's not that much different in principle to buying a second hand car. One looks at asking price and what other types and models have recently sold for, then adjusts up and down for differences in condition, mileage and accessories.''

Valuers arrive at a value for a property by making comparisons with other property sales, and considering other factors such as age, condition, quality, location and replacement costs. In the case of commercial property, the calculations become more complicated as other factors come into play, such as rates of return, and discounted cashflow analysis.

Jefferies says a good valuer will also apply a "good dose of nous''.

"The valuer will weigh physical features, such as location, size, view, quality and age, differently, based on analysis, good common sense and experience,'' he says. ``A reputable valuer keeps close to the market, collects a lot of up-to-date data on sales and returns, and uses modern and effective investigative skills and applies these in the valuation process.''

Generally the standard of our valuers is very high, he says. Training at Auckland, Massey and Lincoln universities, and the reciprocal arrangements for valuers coming here from overseas, meet the very high standards of the New Zealand Valuers Registration Board. Auckland University also has United Kingdom Chartered Surveyors' Institution accreditation, the most coveted and respected in the world.

Registered valuers come under the Valuers Act (1948), which provides for any complaints to be lodged with the Valuers Registration Board and to be investigated by the Valuer-General or the New Zealand Institute of Valuers, and a report presented to the board. If considered serious, a formal hearing will take place and the valuer will be required to respond to any charges. If a valuer is found guilty, they can be fined, censured or struck off the register.

Jefferies says all complaints are treated seriously, and are often very stressful for all concerned.

Glenda Whitehead, practice manager of Quotable Value New Zealand, says valuers live in trepidation of the registration board. "First, you live in fear because it's a very stringent process to get registration, and thereafter you live in fear of ending up in front of the board on a disciplinary matter where they could take it away again,'' she says.

The tough peer monitoring of the industry seems to be effective in maintaining standards. "Generally the industry works at a very high ethical standard,'' she says. "There are very few who don't meet the commonly held high standard, and they're well known to most of the valuation companies, banks and financiers.

"The finance institutions probably won't admit it, but they all have panels of favoured valuers, individuals and companies, whose standards of work they respect. I imagine they also have lists of people they don't accept work from.''

Jefferies confirms the existence of the "white'' and "black'' lists, but points out that they are always unofficial.

He says selecting a valuer is best done by recommendation and the standing of the valuer or their firm, and their qualifications. A bank or mortgage broker will usually be able to advise who might be the best available in each circumstance. Valuers can also be found on the New Zealand Property Institute's website: www.property.org.nz/Membership/Find-a-Member.asp.