EMT511: INVESTMENT APPRAISAL

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EMT511: INVESTMENT APPRAISAL

  1. 1. Valuation vs Appraisal Topic 1
  2. 2. Valuation vs Appraisal  Appraisal can have 2 meanings:-  1. to fix a price  2. to estimate the amount worth of  Valuation  1. The estimation of open market value Definition of market value? A property might reasonably expected to be sold at the D.O.V assuming? :
  3. 3. Board of Valuers, Appraisers and Estate Agent Malaysia  The Board of Valuers, Appraisers and Estate Agents Malaysia was set up in 1981 under the purview of the Ministry of Finance, Malaysia. The setup and operation of this Board is governed by the provision of Valuers, Appraisers and Estate Agents Act 1981. Its primary function is to regulate the Valuers, Appraisers and Estate Agents practising in Malaysia.
  4. 4. Functions  To keep and maintain the Register of Valuers, Appraisers and Estate Agents, Probationary Valuers and Probationary Estate Agents and firms of Valuers, Appraisers and Estate Agents.  To approve and reject applications for registration.  To hold disciplinary proceedings.  To conduct examinations.  To prescribe Scale of Fees.  To regulate the professional Conduct/Ethics of Valuers, Appraisers and Estate Agents.
  5. 5. Role of Registered Valuers , Appraisers and Estate Agents Valuers Only a registered valuer can call himself a – "Valuer", "Land Economist", "Property Consultant" or "Property Manager". He can carry out the practices of valuation, property management or property consultancy. He is educated and trained in all areas of real estate use and development, and is registered only after passing the Test of Professional Competence set by the Board. The valuation of real estate is needed for the following purpose: Financing and credit facilities Acquisition and disposal Taxation or other statutory purposes Investment or other corporate management activities Securitisation and other asset valuation purposes Market and feasibility studies In the exercise of his professional practice, the registered valuer is bound by various guidelines and practice directions issued by the Board such as the Manual of Valuation Standards.
  6. 6. Role of Registered Valuers , Appraisers and Estate Agents Appraiser Appraisers are registered under Part V of the Act because of their long experience and earlier registration under the various Appraisers Acts. Appraisers can, and are allowed to, practise valuation and property management but unlike the Valuers they are restricted in practise by geographical areas and value.
  7. 7. Role of Registered Valuers , Appraisers and Estate Agents Estate Agent Only those who are registered under the Board can act as Estate Agents. They provide a service in buying, selling, leasing properties for clients so that, optimum returns can be achieved.
  8. 8. Role of Registered Valuers , Appraisers and Estate Agents Property manager Property Management Currently only a registered valuer can practice as a Property Manager. The property manager ensures that the owner gets the best returns of his property investment. He also ensures that the building is well maintained, the building services well looked after and all expenses paid. He is able to optimise usage and enhance the investment in property. He advises on lease renewals, selection of quality tenants and the appropriate tenant mix.
  9. 9. MVS standard item Standard One relates to the use of market value as a basis of valuation Standard Two the circumstances when market value is not used as a basis of valuation. Valuation Standard Three outlines the standards expected when preparing valuation reports for financial reporting Standard Four required when valuing properties as collaterals for lending to financial institutions. Standard Five deals with the standards of a valuer and his qualifications. Standard Six discusses the condition of engaging a valuer Standard Seven discusses the various purposes of valuation and the basis of
  10. 10. MVS standard item Standard Eight deliberates the standards required for a proper inspection and referencing of property and neighbourhood Standard Nine standards required in a valuation report Standard Ten standards for preparing revaluation reports of an interest in property which are essentially carried out in situations where a previous valuation has been done by the same firm within a period of 5 years Standard Eleven explains the standards pertaining to certain limited cases where a detailed report may not be essential in communicating an opinion of
  11. 11. MVS standard item Standard Twelve deliberates on the various methods of valuation Standard Thirteen considers the use of assumption in valuations Standard Fourteen standards for the valuation of plant and machinery Standard Fifteen states that all standards issued by the Securities Commission Standard Sixteen “Guidelines on Asset Valuations” Standard Seventeen sets out the standard limiting conditions under which the report is prepared.
  12. 12. Registered Members Licence Type Members Registered Valuers (V) 762 Registered Appraisers (A) 17 Registered Estate Agents (E) 1714 Source: Board of Valuer , Appraiser and Estate Agent
  13. 13. Point to ponder  Price  Value  Worth  How to be a registered valuer?

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