Valuation continually evolves, it’s a market sensitive discipline and anything that affects the market needs to be reflected in the valuations that support important lending and business decisions. If anyone is in any doubt how significant real estate valuation is, the property led global financial crisis provides an abject lesson.
Kate Taylor FRICS explains how RICS standards can help with the management of valuation and your client’s risk.
The important role of valuation
Valuation, as a discipline, is a critical part of the global financial system and its stability. Valuations consist of a range of data that inform the investment decisions of governments, investors, lenders and providers of property services among others.
From a public benefit point of view, valuations help consumers determine the value of some of their biggest personal investments, such as buying a home.
Choosing and using appropriate techniques is important, but a valuer’s relationship with the client and meeting the client’s needs is the way valuation fee income is generated. The way to manage this client contact and reduce risk is through following industry standards.
Confidence through professional standards
The profession is increasingly global with the trend towards international standards continuing apace, with standards such as:
Employers worldwide are adopting valuation standards to project confidence to their clients and are progressing the employees that can demonstrate solid understanding of these standards.
The ability to offer a consistent, objective and transparent approach provides a professional competitive advantage and reassurance that risk has been managed appropriately.
A focus on the Red Book
The Red Book is a practical tool that reflects the world we practice in, the level of detail is greater than many other standards and every valuer (or user of valuation reports) should understand the best practice.
The RICS Red Book is the framework for delivering the International Valuation Standards through a series of guidance notes and practice statements to enable valuers to manage risk for themselves and their clients. Valuation is a litigious area, being up to date can help lower professional indemnity insurance premiums and prevent accusations of negligence.
Stay ahead of the game and discover what valuation distance learning courses we have available, from residential to commercial property.
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