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Property Valuation Report

How to value a property? I calculate the rental yield, cash on cash return, and of course to factor in the “Bank, School, Hypermarket, Highway, and Environment” – my favorite 5 important factors in selecting a property, too.

I received a property valuation report recently for a secondhand apartment in Kota Damansara, which I think is quite a comprehensive report. The property valuer adopted the Comparison Approach.

The most interesting part of the report is their “Residential Mortgage Score (REMS) Template – Non Landed Property”, which I think we should familiar with it as the weightage of each criteria tell us what type of property we should go for and what property not to buy. Please refer to below table:

CRITERIASCOREASSIGNED SCORE BY VALUERWEIGHTED SCORE
SECTION A - LOCATION (25%)
(a)Macro Aspect
Most preferred / established area10
Preferred and established area8
Average preferred area6
Less preferred / new development area4
Non established / Sub-urban area0
(b)Micro Aspect
4 points will be deducted from the location if the property is affected by severe negative features-4
2 points will be deducted if the property is affected by less severe negative features-2
Please state the negative features here ___________
Note: Negative features, if any (e.g. flood / landslide prone area, notorious criminal activities area, near cemetry / waste disposal site / sewerage / oxidation pond, others etc that may affect the accessibility / market preference towards the location)
TOTAL LOCATION SCORE - WEIGHTAGE:25%
SECTION B - SUPPORTING DEVELOPMENT WITHIN THE VICINITY (10%)
(a)Street Width - dual ways neighbourhood road
More than 30 feet width - good2
20 to 29 feet width - average1
Less than 20 feet width - poor0
(b)Commercial Area
Note: Presence of commercial area within close vicinity e.g. shopping centres, hypermarkets, wholesale markets, retail centres, office towers, colleges, hotels etc.
Less than 2 km from the property - good2
2 to 5 km from the property - average1
More than 5 km from the property - poor0
(c)Highway
Less than 5 km from the property - good2
5 to 8 km from the property - average1
More than 8 km - poor0
(d)International or Major Local Retailer & F&B Operator
Availability of outlets less than 2 km - good2
Availability of outlets 2 to 5 km - average1
Availability of outlets more than 5 km - poor0
(e)Availability of Public Transportation in the Vicinity
Well supported by public transportation e.g. LRT / KTM Komuter / Monorail / buses and taxis2
Public transportation not easily available0
Additional Features: Maximum 2 points should be allocated for any additional positive features+2
SECTION C - NEIGHBOURHOOD OCCUPANCY (15%) - APPROXIMATELY WITHIN 5 KM FROM THE SUBJECT DEVELOPMENT
Almost full occupancy - 90% to 100%10
Well occupied - 70% to 89%8
Moderately occupied - 50% to 69%6
Poorly occupied - Less than 50%0
TOTAL NEIGHBOURHOOD OCCUPANCY SCORE - WEIGHTAGE:15%
SECTION D - EASE OF DISPOSAL (20%)
Easy to dispose - within 3 months10
Market Norm - more than 3 to 6 months8
Longer time required - more than 6 months to 12 months5
Difficult to dispose - more than 12 months0
TOTAL EASE OF DISPOSAL SCORE - WEIGHTAGE:20%
SECTION E - TENURE (10%)
Term in Perpetuity - Freehold or 999 years10
Leasehold with remaining lease period of 70 to 99 years (Peninsular) or Leasehold with remaining lease period of 40 to 59 years (Sarawak)8
Leasehold with remaining lease period of 50 to 69 years (Peninsular) or Leasehold with remaining lease period of 30 to 39 years (Sarawak)6
Leasehold with remaining lease period of less than 50 years (Peninsular) or Leasehold with remaining lease period of less than 30 years (Sarawak)0
TOTAL TENURE SCORE - WEIGHTAGE:10%
SECTION F - PROJECT & FACILITIES (10%)
Developer's profile (for property completed less than 1 year)
Good - Listed in KLSE as property based company with good track record5
Average - Property based company with acceptable track record3
Poor - Company with bad track record0
OR
State of maintenance / management of the project (for property completed more than 1 year)
Well maintained - all facilities are operational5
Fairly maintained3
Poorly maintained - Bad condition / dirty compound / unkept grasses etc0
Facilities Offered
Good - Full condominium facilities
Average - Apartment facilities ie. 24 hour security etc
Poor - No facility
TOTAL PROJECT & FACILITIES SCORE - WEIGHTAGE:10%
SECTION G - CONDITION OF THE SUBJECT UNIT (10%)
State of Maintenance
Well maintained with no visible structural defects3
Fairly maintained2
Poorly maintained - Bad condition0
Finishes
Quality finishes3
Average finishes2
Poor finishes0
Additional Features: Maximum 2 points should be allocated for any additional positive features+2
TOTAL CONDITION OF THE UNIT SCORE - WEIGHTAGE:10%

Market Value is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

2 thoughts on “Property Valuation Report”

  1. Haruki
     ·  Reply

    One agent told me the 5 bad points: oxidation pond, TNB substation, high tension cables, cemetery and facing T junction.

    • Horlic
       ·  Reply

      As per remarks in the valuation report, avoid property with negative features e.g. flood / landslide prone area, notorious criminal activities area, near cemetry / waste disposal site / sewerage / oxidation pond, others etc that may affect the accessibility / market preference towards the location.

      I always avoid the 5 bad points, too.

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