Purpose of property valuation:
- Buy – Sale
In real estate transactions, just like in the sale of general goods, buyers always want to buy at the lowest price, while sellers want to sell at the highest price. This is why there must be a middleman involved, namely the appraiser. The appraiser has no stake in either party by offering a fair value and providing an opinion on the value of the property, which will help the buyer and seller agree to buy and sell the property together.
- Compensation
When the government has to carry out various projects, when it is necessary to use land owned by the people, the government must purchase all the land. Sometimes the government’s pricing is set at a price lower than the market price. Therefore, in order to be fair, an appraiser must come in to help analyze and provide opinions so that the government’s pricing for various projects is fair to a certain extent: building new roads, expanding roads, building facilities.
- Mortgage
In order to implement the government’s land-to-capitalization policy, when owners of property or securities want to take their securities or assets to a financial institution to find a source of funds to use in various activities, appraisers will help ensure that the value of a particular asset is accurate and close to the original value because financial institutions generally have different credit policies.
- Lease
Determining the rental value of various types of properties, whether it is a general residence, a flat, an apartment, a condominium, or a building of various types, the rental value depends on many factors, such as location, transportation, convenience, and public services. The appraiser will be involved in analyzing these factors and provide the property owner with a level of return that he or she should be able to obtain as a basis for determining the rental rate for his or her property.
- Insurance
According to the insurance principle, any property that is insured at its full value, i.e. not less than or not more than its actual value, will provide the property owner with the maximum benefit. If the insurance is lower than the actual value, the property owner must bear the burden of the difference between the actual value and the insured value. Or if the insurance is higher than the actual value, the property owner will lose the insurance money without any benefit in the event of an accident. Therefore, a professional appraiser will help analyze the actual value of the property for its intended purpose.
- Cooperation
In the event that a company wants to invest in another company, it is important to know the proportion of the company’s total investment. This is very important. It is necessary to use a qualified person or appraiser to first assess the value of the assets and then use the resulting value to determine the proportion of the shareholding.
- Goverment purpose
In order to create a principle that creates confidence for property owners when they want to change or move their land use rights, and to create conditions for the government to generate revenue from various activities, the state must determine a transparent method for valuing property, so that the general public can understand the methods. In addition, it is also to avoid creating pressure on employees who perform valuation tasks.
- Other purposes
In addition to the above-mentioned purposes, valuation is also important and necessary for many other tasks, such as: valuing assets for entry into the stock market, collecting taxes, and helping property owners or stakeholders plan and make decisions.