Although rarely considered by property valuers, there is a distinction between what we call “value” and “worth”. Actually, in the wider world, we probably use the words “price” and “value”. This is confusing: it means the word “value” is used in two different sense. “I value your friendship” does not imply “I place a price on your friendship”. So, for the discussion of “worth” (and “value” in its second sense), look at our specialism “Value investment“. This “General valuation” section of our website deals with value in the property valuer’s sense or, as we might define it, “price payable in a hypothesised sale”.
Our firm is primarily concerned with the type of valuation required by Courts and Tribunals, rather than by the market. The need to try and establish the value of a property in the property valuer’s sense arises in enfranchisement cases, in dilapidations, and in other statutory and tax circumstances. It can also arise in claims for negligence and transfers between related parties. In all cases, this exercise is concerned with trying to find, not so much a prediction of what the property would sell for, but a fair, reasonable, sensible, and ultimately fixed, figure to work with.
Other types of valuation are required for: security purposes; for corporate accounting; and for helping receivers and administrators to determine the likely proceeds of the sale of certain pieces of real estate. In these cases, as the article “What is valuation, if anything?” suggests, precision tends not to be available, but nonetheless, some effort must be made for these purposes in arriving at a figure to assist decision making.
Valuation which is not covered by a statute of some kind, or some sort of contractual definition, is covered by RICS Valuation – Professional Standards 2014 (“The Red Book”). Our firm tends to deal with the kind of valuations that are not covered by The Red Book.