Get your valuation right

Charles Peter Mwangi, Registered valuer and real estate consultant

By Allan Olingo

1. Is it true that most valuers collude with sellers to overvalue a property for their own gain?

The temptation to overvalue a property is real in valuation since the higher the price, the more the fees will be. There are bad eggs in every sector including valuation.

In many cases when the malpractice is reported, the valuer’s trading certificate is withdrawn or the valuer is altogether suspended from practice.

2. Are there measures in place to reign in rogue valuers?

The Valuers Registration Board is the public body mandated to regulate the practice of valuers in Kenya. Where an individual suspects violation of professionalism either in terms of conduct or the service given, it is good to liaise with this board. It is based at the Ministry of Lands.

The board gazettes the name of registered and practising valuers every year and members of the public can countercheck the names of the valuers they are dealing with against those publicised on the Gazette notice.

3. How important is valuation?

Valuation is a key element in the determination of property values and unraveling the mysteries surrounding actual property ownership and the forms of ownership. Valuers are capable of advising whether there are gray areas in respect to property ownership.

They are trained in respect to corroborating information available on the title with other information available about the same title in survey maps, mutation forms and registry locations.

Valuation also helps in keeping property owners informed about the capital appreciation of their properties as well as market rentals of their properties. They help property owners make decision in respect to the highest and best use of their real estate.

Valuation is the only way one can give correct property value. This can be to other interested parties such as banks, insurance companies, mortgage institutions, potential buyers or purchasers of the property or to challenge compensation in events where for instance a property is compulsorily acquired by the government.

4. What determines the cost of valuation?

Valuation is a regulated practice in Kenya and the fees charged for valuation reports are regulated. The public watchdog in Kenya in respect to all valuation matters including professional fees to be charged is the Valuers Registration Board, The board provides the Valuers’ Scale of Fees.

The fees are outlined in the Valuers Act (Cap 532) Legal Notice Number 92 of the Laws of Kenya – Valuers (Forms and Fees, Amendment rules, 2011) and vary depending with the nature of the valuation assignments.

Valuers are restricted by rules of trade governing professionals and are obligated to promote professional ethics and conducts by not charging outside the scale of fees provided.

5. When getting a valuation, why is it important to work with a valuer instead of an agent?

Working with a professional has no risk, as every valuer is registered with VRB. They must have an Annual Practising Certificate that shows that he or she has met certain thresh holds set by VRB that are meant to protect members of the public from imposters.

To be given the Annual Practising Certificate, a valuer must have a professional indemnity cover. The cover is meant to protect the client if by any chance they are exposed to financial loss owing to the negligence of the valuer where they can recover their money.

6. How important are the professional organisations representing valuers?

The Institute of Surveyors of Kenya is the professional organisation coordinating the work of valuers in Kenya and all valuers are members of the institution. The organisation frequently holds public workshops to sensitise members of the public in regard to their services.

Within the organisation, there is the Valuers and Estate Management Surveyors (VEMS) that coordinates the Valuation and Property Management practices amongst valuers and property managers in the institution.

7. Where does one lodge a complaint against a valuer?

ISK has an arm that handles professional misconduct and all complaints related to the practice of valuation by their members. All complaints in respect to malpractices should be lodged with the institution for investigation and resolution.

8. What are feasibility studies in valuation?

Feasibility studies are a major constituent of valuation assignments and constitute the practice of developing tools to assess the viability and profitability of a given investment project within given financial, legal economic and time constraints.

It is an in-depth analysis undertaken to ascertain the most viable economic activity amongst alternatives.

9. How important are they?

It assesses whether a given project will fulfill the investment objectives of an investor, based on prevailing market conditions.

It assesses the worth of an investment in terms of the investment rate of return, the internal rate of return, the net present value, the profitability index, payback period and advises the investor on the highest and best possible application of the investment capital.

10. How does a client select the best property management service?

The best property manager is one who is registered and has a practising license from the Board that is issued annually. The property manager is also by law supposed to have a professional indemnity cover to indemnify or protect his clients from any possible loss.

When working with a registered and licensed estate agent, you stand to get protection from the licensing authorities and the professional body controlling the practice. Unfortunately, this is one of the most abused professions in Kenya today, with many unlicensed people masquerading as property agents.