Estimating The Reinstatement Or Replacement Cost In Valuation: A Case for the Estate Surveyor and Quantity Surveyor to Work in Tandem in Perfecting Valuation Briefs When Using the Contractor’s Method (Depreciated Replacement Cost Method) In Determining the Value of Properties (Published)
This paper seeks to highlight the need for Estate Surveyors and Valuers in Nigeria to improve on their current cost estimation techniques when valuing non-rent yielding and specialized properties using the DRC method of valuation and most importantly engage the services of Quantity Surveyors in ensuring that accurate cost estimates are provided for use in the valuation process. The research methodology adopted in actualizing the aim of this work made use of primary and secondary sources of data which included questionnaires and oral interviews. The measurement analysis of data made use of statistical tables and simple percentages. The postulated hypotheses on the other hand was tested and analyzed using the chi-square Statistic technique with a significance level of 5% (0.05). The findings showed that indeed there was a dearth of information on the part of Estate Surveyors and Valuers when it came to the knowledge and use of current cost estimating methods when valuing properties using the DRC method of valuation. These findings also highlighted the fact that the services of Quantity Surveyors most times are not commissioned when these cost estimates are to be determined for valuation, hence leading most times to properties being undervalued or overvalued. In a nutshell, the recommendations postulated dwelt on improving the cost estimating knowledge of Estate Surveyors and Valuers through seminars, symposiums and workshops organized by NIESV and NIQS, awareness of the need for Valuers to work with Quantity Surveyors to perfect valuation briefs involving the use of the DRC method and changes made to the curriculum of the study of the course Estate Management in tertiary institutions.
Keywords: Depreciated Replacement Cost, Estate Surveyors, Properties, Quantity Surveyors, Valuation
Sources of Anchor Data and Adjustment Amounts in the Valuation of Residential Properties (Published)
This paper ascertained how valuers generate anchor data based on past valuations experiences and how adjustments were made on the anchors to obtain capital values of residential properties. From a Total population of 260 registered firms, 164 were located. Yamane’s (1967) formula with 0.05 sampling error was adopted in determining sample size. It was found that sources of anchor and what valuers have been adjusting for varies. Additionally, generating anchor data from local experts was more common than from firms’ records; while general adjustment of anchor for differences in identified attributes has highest adoption rate (92.3%). Previous value experience of subject property is the most common of considered anchor sources. Externally generated anchor ranked higher in use than internally generated anchor; but ranked lower in terms of adjustment. Adjusting without identification of differences in attributes should be avoided to prevent misrepresentation of comparable and loss of clients’ confidence
Keywords: Adjustment, Valuation, anchor, data, residential property
CHALLENGES OF USING THE COST METHOD OF VALUATION IN VALUATION PRACTICE: A CASE STUDY OF SELECTED RESIDENTIAL AND COMMERCIAL PROPERTIES IN AWKA AND ONITSHA, ANAMBRA STATE, NIGERIA (Published)
By Definition, the cost method also known as the Depreciated Replacement Cost (DRC) method of valuation is a method of determining the value of a property or an asset by reference to the cost of replacing the property or asset as new, and then making allowance for depreciation to take care of age, wear and tear and other forms of obsolescence (Ifediora, 1993). In valuation practice, it is usually adopted where there is a lack of data for income method or where the property is new and there is no sufficient evidence of recent property transactions in the open market. The DRC method from the professional view point however relies on a good knowledge of construction costs or unit rates of construction as regards landed property or assets generally. This can pose serious challenges where relevant data is not available. It could in turn result to assumptions which are indefensible in a court of law.
Keywords: Construction Rate, Depreciation, Replacement Cost, Valuation