SACPVP Associated Valuer key terms

The estimated amount for which an asset should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing, with each acting knowledgeably, prudently and without compulsion.

The specific point in time at which the valuer's opinion of value applies, reflecting market conditions and the asset's condition on that date rather than the date the report is signed.

The most probable use of a property that is legally permissible, physically possible, financially feasible and maximally productive, and which therefore supports the highest value.

Data on transactions or asking prices of similar properties, adjusted for differences in location, size, condition and date, used to support an opinion of value under the sales comparison approach.

A rate, expressed as a percentage, applied to a property's net operating income to convert it into an indication of capital value, reflecting risk, growth and market expectations.

The income a property generates after deducting operating expenses and allowances for vacancy and collection losses, but before deducting debt service, income tax and capital expenditure.

The rate used to convert future cash flows into a present value, reflecting the time value of money plus a return for the risk and uncertainty attached to those cash flows.

The discount rate at which the present value of a project's cash inflows equals the present value of its outflows, producing a net present value of zero.

The difference between the present value of expected future cash inflows and the present value of cash outflows, used to judge whether an investment adds value at a given discount rate.

In valuation, the loss in value from a property's reproduction or replacement cost caused by physical deterioration, functional obsolescence or external economic factors, not an accounting charge.

A reduction in property value arising from factors such as outdated design or layout (functional) or adverse changes outside the property such as road changes or market decline (economic).

The cost of rebuilding or repairing an insured property to its pre-loss condition, used to set sums insured and typically including demolition, professional fees and compliance with current building regulations.

The current cost of constructing a building of equivalent utility using modern materials and methods, often used in the cost approach to value.

A form of ownership in which a person holds title to a defined unit within a building or complex together with an undivided share in the common property, managed by a body corporate.

The legal entity comprising all owners of units in a sectional title scheme, responsible for managing and maintaining the common property and levying owners for its expenses.

The share allocated to each sectional title unit, expressed in the scheme's rules, which determines the owner's undivided share in common property and contribution to levies.

A company-based ownership structure in which a person buys shares in a company that owns a building, giving a right of use of a particular unit rather than direct title to land.

The official document registered in the deeds office that records the owner of a property, the extent of the land, and any conditions, servitudes or bonds affecting it.

A registered right allowing one party to use another's land in a defined way, or restricting the owner's use, such as a right of way or a right to lay service pipes.

Any registered burden on a property that restricts its use or affects transfer, such as a mortgage bond, servitude, restrictive condition or caveat, and which a valuer must identify and report.

The statutory classification of land by a local authority that sets out permitted uses, density and development controls for a property, directly shaping its highest and best use.

The formal statutory process of changing the zoning of land to permit a different or more intensive use, usually requiring public participation and approval by the local authority.

The statutory process of subdividing and registering land into erven, roads and public open space, which must be approved and completed before individual erven can be transferred.

The legally surveyed line defining the extent of a land parcel, recorded on a diagram or general plan and used in the deeds office to describe the property being transferred or valued.

The unlawful extension of a building or structure over a boundary or into another person's land, or over building lines, which can affect value and may require rectification or a servitude.

A line shown on a site plan or imposed by by-laws that sets the minimum distance a building must be set back from a street or boundary.

Moisture that moves upward through masonry from the ground by capillary action, typically showing as damp patches and salt staining on lower walls, often caused by a failed damp-proof course.

A barrier, usually built into a wall near ground level, that prevents moisture rising through the structure; its absence or failure is a common building defect affecting value.

A fault in a building or property that is not readily visible on reasonable inspection and may only emerge later, such as hidden structural cracking or defective waterproofing.

A fault or deficiency in a property that is visible or should be apparent on a reasonable inspection, such as cracked plaster, missing tiles or obvious settlement.

Any deficiency in a building's design, materials, workmanship or maintenance that affects its condition, performance or value and should be identified and reported by the valuer.

The total floor area of a building that can be let to tenants, measured according to a defined standard and used as the basis for rentals and income-based valuations.

The estimated amount for which a property or space would rent on the valuation date between a willing lessor and willing lessee on appropriate lease terms in an arm's length transaction.

Information that a reasonable person would consider relevant to a decision, such as a defect, contamination or pending rezoning, which the valuer must disclose and must not conceal.

A situation where a valuer's personal, financial or other interests, or a relationship with a party, could improperly influence the opinion given, and which must be disclosed and managed.

The state of being free from influence or pressure that could compromise a valuer's judgement, requiring objectivity, impartiality and avoidance of contingent fees or undisclosed relationships.

The reasonable investigation and enquiry a valuer undertakes before giving an opinion, covering title, zoning, physical condition, market evidence and any other matters relevant to the instruction.

The written agreement between valuer and client setting out the purpose, scope, basis of value, assumptions, limitations, fee and reporting requirements of the valuation assignment.

The written record of a valuer's opinion, stating the purpose, basis and date of value, the property inspected, the methods used, key assumptions and any limiting conditions.