YOU’RE building or expanding your dream home and you’re convinced it will be worth millions one day. But that may not necessarily be true, because what you think really doesn’t matter.

“In terms of the price for a property, anybody can ask for anything but it’s the valuer who guides the financial institution as to what the property really can derive on the open market,” qualifying director/broker at CD Alexander Company Realty Limited Magne Evering told the Jamaica Observer.

Among its wide range of services CD Alexander does valuations of all property types: commercial, industrial, residential, agricultural, and resort.

“Some people are caught up in sentimental attachment and may think, ‘I built this from the ground up, and it cost me a whole lot,’ but cost and value are two different things. What it costs to build a property is not necessarily what it’s going to value,” added Evering.

Valuers like Evering and his colleagues are vital to real estate transactions. The Sunday Observer asked him to explain the role they play and how they keep real estate players honest.

In a property transaction, what is the role of the valuer?

Magne Evering (ME): We are approached to do valuation for a number of reasons, whether representing the purchaser or the vendor. For the purchaser, typically, this person needs to know the value of the property in order to make an offer or place a bid on the property. We have to conduct the necessary research to give them the guidance as to what the market would ask for a property of that type, specific to that location, at the given time, in a given state of repairs, and constructional materials used.

This information is usually required by an external party, for example a financial institution if the person is going to be financing by way of mortgage. It’s really a guide for them as to how they should bid on the property.

For the vendor, in the event that the person who wants to dispose of their property is not certain what to ask for, the same procedure applies. We go and we do the investigation and provide an opinion on market value for them to list their property.

For the inspection purpose, we take photographs to help describe the property which we are inspecting. When we’re doing the report the photographs help to substantiate our findings and to explain what we have seen. For the purpose of the vendor, we take the more glamorous picture for them to really help to market the property. And for the purchaser, we would have looked at all areas, noting specifically any defects. We are helping people not to buy a ‘puss in the bag’.

Whether we are representing the purchaser or the vendor, after the inspection we come back in office and we utilise some approaches. For a typical buying or selling transaction for residential purposes there are three possible approaches: income-investment approach, sales-comparable approach, and cost-contractor approach.

Briefly describe the process of valuing a property.

ME: In terms of the valuation process, we start from our desk by pulling around six properties of similar location, similar description. Most of the time we have not yet seen the property, so we pick these based on our knowledge of the area. This information is obtained from the Stamp [Duty and Transfer Tax Office], or on the Jamaica properties database. Then we go to the subject property, conduct an inspection, which is done internally and externally. We look at the constructional features, the accommodation, and the state of repairs of the building.

We look at the grounds to see what are the advantages or disadvantages of this property and see how it stacks up against the six comparables which we have. We also take external measurements for the valuation. We need to get the gross building area, which we utilise in our formulas.

What are some ways in which a seller may try to push up the value of a property?

ME: From time to time persons try to cheat when they’re selling, but when I go to a property that is being sold and I see a fresh coat of paint, my antennas are up. I’m going to ask, ‘Why did you paint if you’re selling?’ If they tell me they’re just trying to give the place a pop, then I will know, based on how it is painted. Some people just paint it in white. Of course, that’s the cheapest coat of paint. But white doesn’t usually mask everything. I am looking to see what they have tried to mask.

With time, we are able to master our craft. We look for tell-tale signs: We look for termite trails on walls, water marks on walls. We find settlement just by walking — if there’s an uneven nature in the ground, maybe there are cracks. Sometimes valuers will knock the wall — they tap here, they tap there, open cupboards, look. We know what we’re looking for, with time and experience.

It’s good to go through thoroughly, and we ask questions.

How does one select a suitable valuer?

ME: We’re all registered with the Real Estate Board, the governing body for all real estate professionals in the island of Jamaica, so you can check their website. Once they’re not Real Estate Board-registered, forget about it. Then you have those who are further advanced with accreditation from the Royal Institute of Chartered Surveyors (RICS) in Britain.

What is one of the biggest misconceptions people have about land valuers?

ME: Calling us valuators instead of valuers is a common one. Valuators are for the automobile industry. We are valuers or appraisers, because we’re not limited to any form of property.

Valuers can help people avoid costly errors.

Valuers or appraisers are not limited to any form of property.