Whose responsibility is it to determine the value of a property?

A valuer determines the value of assets based upon market condition at a given time. As such, a professional valuer must possess on-the-ground understanding and knowledge of the relative forces and influences that create, maintain or diminish the value of tangible or intangible assets under evaluation, and at the same time portray various professional qualities and capabilities.

In this respect, a valuer has to satisfy various obligations and responsibilities, which ensure an impartial implementation of duties.

When it comes to valuation, there are several bases of value and methodologies. Hence, it is the valuer’s obligation to determine which are pertinent to a particular undertaking and helpful in determining an opinion. The important obligations and responsibilities of a valuer are detailed as follows.

Avoid giving a false result: The professional valuer is obligated to avoid reporting a false amount. The result of a valuation could be false for two reasons: it is a grossly inaccurate estimate of the appropriate value or, even though it is numerically accurate, it is an estimate of an inappropriate value.

Satisfy the client: The valuer’s primary obligation to his client is to reach a comprehensive, accurate and pertinent conclusion. Hence, ethics and morality form a very important part of the valuer’s obligation.

Present data without bias: When engaged by one of the parties in a controversy, it is unethical for the valuer to suppress the facts, data or opinion, which are contrary to the case his client is trying to establish. It is the valuer’s obligation to present data, analysis and value without bias regardless of the effect of such unprejudiced presentation.

Provide service only in one’s competent field: It is not suitable for a valuer to accept an engagement for the valuation of assets, a type for which he is not qualified to value or in a field outside his professional classification.

Serving clients with conflicting interest: When two or more potential clients seek a valuer’s service with respect to the same asset or where conflicting interests may be at play, the valuer should avoid giving service to both parties.

Ethical practice and competency: A valuer’s competency is attained by educational qualifications, training, continued professional development, practice and experience. Valuers must also recognise, understand and abide by the ethical principles that are connected with the profession.

Responsibilities to third parties: Valuers should recognise their responsibility to third parties, other than the client. Under certain specific circumstances a valuation report may be given by a client to a third party, which may also have a right to rely on the validity and objectivity of the valuer’s finding.

Joint responsibility of valuers: In cases where two or more valuers are employed to prepare a joint report, the user is entitled to assume that both valuers that signed the report are jointly and severally responsible for the validity of the findings.

Explain the valuation method used: It is required that the method selected by the valuer is applicable to the subject valuation and is adequately described and explained in the report.

Agreement for the valuation job: It is always preferable to have a written and signed agreement or contract with the client. This should detail the subject property and cover the purpose, scope of work and period of delivery of the report. It must also clearly identify who the client is and the agreed professional fee.

Professional conduct: A professional has acquired a high degree of acumen and considerable experience to become skilful. Clients rely on a valuer’s professional knowledge and abilities to the extent that may be necessary to accomplish their work.

Broaden quality of service: All activities of a valuer must be rational and self-examined. Accountability is the essence of any valuer’s work. Valuers must continuously work towards ensuring the quality of services with requisite skills, processes, procedures, standards and values.

Confidentiality: Knowledge by third parties of a valuer’s engagement may jeopardise a client’s proposed actions. Consequently, it is improper for a valuer to disclose an engagement, unless the client approves of its disclosure.

Multidimensional role: A valuer’s responsibility and accountability have increased in recent years, due largely to heightened financial due diligence during times of economic challenge. Globalisation has redefined the impact of valuation. The opinion given by a valuer should be supported by documents, as it is evidence of value while maintaining a high degree of integrity and fairness. There must be a judicious approach in valuing assets correctly, taking into consideration the prevailing market conditions.

Adherence to valuation standards: A valuer adheres to valuation standards and applies them thoroughly in every valuation assignment. A valuer is committed to deliver reports with accuracy and complete transparency. Examples of professional standards would include the Red Book as issued by the Royal Institution of Chartered Surveyors and local regulations and requirements as set out by the Real Estate Regulatory Agency of the Dubai Land Department.

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