The valuation process – Getting the right valuation

It is easy to underestimate the skills of professional valuer. When a client reads a valuation for the first time and sees the values of their assets, it might seem as though the figures have been determined using a dart board or a bingo wheel, but in reality the process behind each valuation is a lot more detailed and researched.

A professional valuer must be accountable and make well-researched, justifiable decisions on the value of each asset.

Every Hassalls valuation follows a well-structured process, which aims to identify the correct value of an asset and provide our clients with the most reliable information. But before pen hits paper or we go out into the field, some questions must be asked so we can give our customers the right report for their specific purpose.

Why do you need the assets valued?

The first step in valuing any asset is determining why the client needs the asset valued.

Mortgage Security - This is the most common use for valuation on plant and equipment, mostly requested by banks.

Asset Realisation - These valuations are used when the client is looking to sell their asset either because they are surplus to requirement or in a liquidation scenario.

Financial Reporting - These valuations are typically used by companies who are updating balance sheets, transferring assets or for reporting purposes.

Other instances where asset valuation may be required include insurance, matrimonial and deceased estates.

Understanding this information at the very beginning may impact the scope of the task and the approach that is taken to the valuation.

Do you need a sighted or desktop valuation?

Most banks and lending organisations require sighted valuations where the valuer can physically inspect and verify the asset’s condition, age, serial numbers, kilometres, hours, and specifications. This gives the valuer an opportunity to get all the relevant information about the asset, ask questions and sight the asset in use.

Desktop valuations are conducted on information supplied by the client and totally reliant on that information being true and correct. If sufficient information is not supplied the valuer may be required to make assumptions on the asset which could affect the final figure.

At Hassalls, we recommend a sighted inspection where possible to eliminate guesswork.

What definition of value to you require:

There are more than ten different definitions of value that can be attributed to the same asset, which will arrive at different results.

The three commonly used definitions of value used are:

  • Fair Market Value - is an opinion expressed in terms of money, at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts, as of a specific date.
  • Orderly liquidation value – the estimated gross amount that could be obtained via wide-reaching search for a buyer. This assumes there is a reasonable period of time to find a purchaser.
  • Auction Realisable Value - is the estimated gross amount expressed in terms of money that could be typically realised from a properly advertised and conducted public auction, with the seller being compelled to sell with a sense of immediacy on an as-is, where-is basis, as of a specific date.

Knowing the reason behind the valuation and how the report and using the right definition of valuation will help the client get a creditable and proper report for their purposes

Hassalls is home to trusted and professional valuers who know the resources market inside and out. When we work with our clients, we ensure we get to know them and their unique situation so we can arrive at the most genuine, authentic value.

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