Professional surveying and valuation of property

When should one decide to get a professional survey and valuation of one's immovable property? Before answering this question, a distinction between surveying an immovable and valuing it must be made.

A survey entails a thorough examination of the immovable property in question by a qualified architect. A 'health check' of the immovable involves the architect inspecting it thoroughly and on the basis of such inspection, determining several things, including whether the property is structurally sound, whether it requires certain repairs, whether the roofs are sturdy enough for further construction if this is required.

If required, the architect also establishes the expenditure required for the upkeep and maintenance of the premises under inspection. He also identifies the potential for development, whether commercial or residential.

A valuation, on the other hand, although distinct from the exercise of surveying, involves primarily surveying skills where an investigation of the premises also takes place. This is followed by a systematic application of various valuation principles which eventually establishes the market value of a particular property.

A property valuation is most commonly required in the case of succession, where a particular immovable has been inherited by an individual. Surveying and valuing an inherited piece of property gives the new owner important information about the newly acquired immovable.

Surveying and valuing should also be carried out before purchasing an immovable. If a 'health check' of the immovable is carried out by the prospective purchasers, they will be in a much better position to decide whether to buy it or not and whether they are actually making the intended investment.

The prospective buyers will be aware of all the expenses incurred on the property. The expert eye of the architect will inform you about any defects which perhaps could go unnoticed. He will also make sure that all the building regulations have been adhered to, thus avoiding future penalties.

Property valuation should also be carried out to check whether the seller's asking price is overly inflated or whether it approximately conforms to the value as determined by the open market. As has already been said, the architect will also be able to establish its potential as an investment.

It is submitted that the task of valuing a particular immovable property is a mixture of both art and science. This is because valuing a property entails both a subjective and therefore an artistic approach, but also an objective approach which is scientific in nature.

It is subjective in that it relies on the architect's professional judgment. It is objective in that the valuation of an immovable must be done by following established principles of valuation.

Two main approaches are applied to evaluate a property - the comparable sales and income approach methods. The former focuses mainly on the comparison of prices of immovable property situated in the same area or in similar locations. The architect performing the valuation examines the size, conditions and utility of the premises.

If need be a search in the Land and Public Registry is also carried out. After investigating, the architect then applies his own judgment to establish the market value of the immovable.

The value of immovable property is an objective state of affairs which is generally determined by the environmental and physical characteristics which make it up, by economic influences and social standards and also by the regulations of the area.

It is to be pointed out however that the term value also has its subjective side. A particular property may be more valuable to one person than to another either because that person values particular features of the immovable more than the other or because that property has a better utility to one person than to another.

The second approach by which an architect establishes the market value of an immovable property is by focusing on the projected future net income. The architect studies the potential of the immovable to generate an income whether by lease, emphyteusis, etc.

Using this approach the architect establishes the prospective income and resale value of the immovable. A formula is applied by which the income that the immovable may generate is compared to other forms of investments.

Surveying and valuing your property is a must. The importance lies in the fact that the owner or prospective buyer gets to know his property or the property he intends or wishes to buy. Property surveying and valuation may help prospective purchasers to make wiser choices thus avoiding litigation in court for defects in the property which the untrained eye could not have spotted.

Dr Alex Buontempo and Dr Stefan Buontempo, MP, are both qualified architects specialising in residential and commercial property valuation and surveying.