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Residential Valuations Coverage Greater Perth Metropolitan & South West Regions 1 YEARS OF EXPERIENCE Director 1 Associate Director 2 QRM Valuation Managers 0-5 Years 15-20 Years 24 5-10 Years 20 Years + 10-15 Years Valuers
C ONTENT 01 02 03 ABFI Standing Construction VALUATIONS Valuation Challenges and Instructions for • Sales and Building changes through COVID- Valuing Cost analysis 19 Residential • Valuation Properties methodology
ABFI Standing Instructions First Mortgage Valuation & Security Assessments In scope/out of scope • Definitions and Highest and Best Use • Construction and Off the Plan VALUATIONS • SALES evidence • • Assessing Risk Progress Inspections and Restricted Assessments •
ABFI Standing Instructions Valuation Assessment • Market Value Premise of Value The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.” - Australian Property Institute ‘ Highest and best use’ is defined as “the use of an asset that maximised its potential and that is physically • possible, legally permissible and financially feasible.” • Where the subject property is ‘under contract’ at the date of valuation the Valuer must consider the negotiated and agreed ‘purchase price’ of the subject property, the date of the contract, and the veracity of the sale.
ABFI Standing Instructions Sales Evidence The Valuer has a duty to • Settled Sales’ evidence in the Report should include a minimum of three (3) sales of properties considered by the Valuer to be most comparable sale properties; and undertake a ‘kerbside’ ideally inspection of all sales be within six (6) months of the date of valuation; and also • evidence relied on in the be within 15% (plus or minus) of the market value adopted in the report • Report • Where this is not achievable (that is, where there is limited or no sales evidence of comparable properties) the Valuer must provide additional and specific comment in relation to sales evidence. Sales evidence included in the Report must be re-sales rather than the ‘first’ sale of the • The Valuer should advise what adjustments have been made and the basis of comparison (e.g. dated sales or out of area sales). property from a developer ‘Under Contract / Unsettled Sales’ can be considered by the Valuer and, if • deemed appropriate, included in the Report. When an ‘under contract / unsettled sale’ is included it must be clearly identified as either ‘Under Contract’, ‘Unsettled Sale’ or ’Agent Advised’ in the description of the ‘sale’.
ABFI Standing Instructions Sales Evidence and the Market The Valuer should also consider the following additional information, and, if deemed appropriate by the Valuer, retain on file. • Contracts for sale that have been entered into but not completed Developer sales that are from the same development • Strata Sales When considering sales evidence for the valuation of ‘new’ units/apartments/townhouses, the Valuer must provide a minimum of three • (3) re-sales external to the subject development. This does not mean that re-sales in the subject complex be discarded, but that they need to be compared against the market.
ABFI Standing Instructions Other requirements NDIS (National Disability Insurance Scheme) Electrical Padmount Stations Restrictions on Resale & Special Conditions within a Contract API – Property Risk Ratings Identifying Electricity Line
Construction Valuations A Construction valuation is completed on an ‘As If Complete’ basis and provides the market value of the proposed • improvements assessed on the assumption that all construction has been satisfactorily completed in accordance with the plans and specifications provided and final Council Approval obtained. The valuation assumes that the residence will be constructed in accordance with the approved plans, the Building Code of • Australia to trades standards and that all necessary final certificates will be issued on completion. • The valuation reflects the Valuers view of the market conditions existing at the date of the report and does not purport to predict the market conditions or the value at the actual completion of the improvements.
Construction Valuations Costings and Considerations If the tender including contract and non- contract items ‘ As If Complete’ valuations should does not represent a fully established dwelling (e.g. not be the precise sum of the price excludes driveways, landscaping, floor coverings, etc.) paid for the land plus the building then : contract as Valuers should determine an appropriately 1. Appropriate adjustments will need to be made when comparing the proposed dwelling to fully established sale properties (that is rounded market value with landscaping, fencing, driveway and risk analysis). reference to sales evidence 2. Appropriate comments will need to be made regarding the impact on marketability and value of the subject property not being fully established at the completion of the building works (in accordance with the building documents supplied and relied upon).
Construction Valuations Sales Evidence – Compare like with Like Consider the following: • Type and size of improvements • Level of finish of improvements • Age and Condition of improvements • Presentation of improvements • Car accommodation • Swimming pools, tennis courts, sheds • Land area • Zoning Minimum of 3 x sales ideally within past 6 months and 15% of market value
Construction Valuations Valuation Methodology Direct Comparison Summation • Underlying land value from vacant land sales with similar location, size, • Compare each sales evidence in zoning relation to the subject property • Apply a building rate to internal living area, outdoor areas, car • Inferior, superior or comparable to the accommodation, landscaping, fencing, driveway, ancillary improvements, subject property retaining walls • Depreciation DEPRECIATED LAND VALUE SUMMATED REPLACEMENT VALUE COST
Construction Valuations Construction As If Complete Valuations Information Required: • Offer and acceptance of land, if applicable • Building contract including Progress Payment Schedule • Building plans • Specification • Addenda to specification • Quotes Note: Critical that we receive the full offer and acceptance, inclusive of any rebates or incentives
Construction Valuations Construction As If Complete Valuations Not just land contract PLUS building contract • We need to assess the market value of the subject property upon completion, compared to COST DOES the sales evidence within the market of similar properties NOT always • Referring back to the definition of Market Value - “The estimated amount for which an asset or EQUAL liability should exchange on the valuation date between a willing buyer and a willing seller in VALUE an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.” • Check rate per sqm of building costs – under, in line or above • Keep in mind, we are comparing to fully established homes including front and rear landscaping, internal wall painting, which are commonly not included in many building contracts Sales Evidence • Comparison to established properties • Front & rear landscaping Compare like with like • Internal wall painting • Window treatments, light Fittings, A/C, security, pools, patios, sheds, floor coverings
Construction Valuations Case Study 1 – Lot 1915 Mirt Trail, “xxx Estate” LOT SIZE: 295sqm CONFIGURATION: 3 bedroom, 2 bathroom, entry, dining, kitchen, meals, laundry, alfresco and porch INTERNAL LIVING SIZE: 123 sqm QUALITY FIT OUT: Standard project fit out with floor coverings, window treatments, air conditioning ANCILLARY: Paved driveway, porch and alfresco EXCLUDES: Internal wall painting and landscaping LAND: Under Contract $177,000 • Full contract supplied • Includes boundary fencing and front landscaping. No other incentives. BUILDING CONTRACT: $204,515 reflecting $1,663/sqm internal living area. Within Bushfire Prone Area. • Base: $184,490 reflects $1,500/sqm internal living area • Site Works: $16,550 • Variations: $3,475 • Excludes internal wall painting and rear landscaping
Construction Valuations Case Study – Lot 1915 Mirt Trail, “xxx Estate” | Sales Evidence Map Subject
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