Property valuation is a very important component of any real estate business. It is also used for other types of valuations too. There are main reasons why property valuation is considered important. The main reason for it is to ensure that the stakeholders get the right information about the fair market value of the property that is being either bought or sold. Many customers are of the opinion that the market itself will be able to give a good indication about the fair value of a property. Hence, according to them spending money on property valuation is a wasteful expenditure.
However, the above logic is only partially true. Many a times when the contract has been signed and has reached the final stages of execution, it has been found that the value of the property is either too high or too low when compared to the fair market value. In such situations there could be lot of problems and the entire contract might run the risk of being abandoned. To avoid such situations spending a few hundred dollars will not be a bad idea to ensure that nothing like this happens in the final stages. Further, property valuation is also need for other purposes such as calculation of property tax, arriving at the stamp duty amount payable just to name a few.
Now that we have a clear understanding about the importance of property valuation, there is a need to regulate the same because of various reasons. Regulation is a must for any service that impacts thousands of customers monetarily. Today you have regulators overlooking banking and financial institution functioning. There are regulators in the insurance sector and also in the telecom sector. In the same way there is a need to regulate property valuation.
The main objective of such regulation is to ensure that the service providers follow some laid down guidelines and rules when conducting their business. The main objective of any real estate valuer should be to give the best to the customers in terms of quality of service, adherence to time lines and accurate of information that is provided. To ensure that this happen, regulators could be mandated with the task of monitoring the valuers on a regular basis. The objective of such regulation is not to find faults but to ensure that they are running their business properly and all guidelines are being followed as per the rule books.